How to Protect Your Deposit and Payments When Sourcing from China
Payment is where most losses happen. Escrow, letters of credit, and staged payments — how to structure your money so it's hard to steal.
Fraud almost always converges on the payment. No matter how good your due diligence, how you structure and route your money is your last and most important line of defense. The goal is simple: never put yourself in a position where a supplier can keep your money without delivering.
Choose a protected payment method
- Escrow / Trade Assurance (e.g. Alibaba Trade Assurance) — the platform holds funds and releases them on confirmed delivery; your strongest retail-level protection.
- Letter of credit (L/C) — your bank pays only against documents proving shipment; standard for larger orders.
- Bank transfer (T/T) — common but offers no built-in protection; only safe when staged correctly.
Stage your payments
Avoid paying 100% up front. A common, safer structure is 30% deposit to start production and 70% against a copy of the bill of lading or before/after shipment — with a pre-shipment inspection between. For a first order with an unproven supplier, negotiate the smallest possible deposit.
Never pay like this
- Western Union, MoneyGram, or cryptocurrency to a party you haven't fully verified.
- Payment to a personal bank account or to a beneficiary whose name differs from the registered company.
- Large deposits to a brand-new supplier before any live verification or inspection.
Match the account to the company
The beneficiary name on the bank account must exactly match the registered company name on the business license. A legitimate company pays and receives money through corporate accounts. A request to pay a different entity — or an individual — is a red flag that voids much of your legal recourse.
If payment details 'change' mid-deal, treat it as a security event. Call a phone number you already trust (not one in the email) and confirm verbally before sending anything.
Structure is your protection, not suspicion. Legitimate suppliers understand staged payments and inspection holdbacks — they're standard practice in international trade. A supplier who refuses them is doing you a favor by revealing themselves early.
Related guides
Verify a supplier now
Run due diligence on a Chinese supplier before you pay.