Telegraphic Transfer (T/T)
T/T (telegraphic transfer) is a bank wire that sends payment directly from buyer to seller's account; it relies on commercial trust, is cheap and fast, and is the most common settlement method for SME export orders.
Telegraphic transfer (T/T) is a payment by which the buyer instructs its bank to wire funds via SWIFT into the seller's designated bank account. It is fundamentally a payment based on commercial trust between the parties: the bank only moves money and does not examine documents or guarantee the goods, which is the key difference from a letter of credit (bank credit).
A typical structure is 'deposit + balance': an advance payment after the order/contract to start production, with the balance collected before shipment or against a copy of the bill of lading. The split is negotiated and should be written into the PI/contract. T/T suits smaller orders and customers with an established or trusted relationship.
Key practical points for Chinese exporters: a lower deposit ratio means higher collection risk (cargo abandonment, price renegotiation, non-payment), so be cautious with new buyers; verify beneficiary details and beware of business email compromise (BEC) where fraudsters alter bank-account instructions — confirm any account change by phone; keep FX receipt records consistent with the contract and invoice for customs declaration, FX reconciliation and export tax rebate; for large or high-risk orders, consider pairing T/T with an L/C, export credit insurance, or third-party escrow.
FAQ
- Which is safer, T/T or L/C?
- They differ in nature. T/T relies on commercial trust, so safety depends on the buyer's reputation and the deposit ratio. L/C is bank credit: the issuing bank pays against compliant documents, giving the seller stronger payment assurance, but with higher fees and stricter documentary requirements. T/T fits small or repeat-customer orders; consider L/C or export credit insurance for large orders, new buyers or higher-risk markets.
- What do 'T/T in advance' and 'T/T after shipment' mean?
- T/T in advance means payment is received before shipment, favoring the seller; T/T after shipment means payment comes after dispatch (e.g., against a B/L copy or on arrival), carrying more risk for the seller. Most orders use a hybrid: a deposit at order placement and the balance before shipment, with the ratio agreed in the contract.
- After receiving a T/T payment, how do I handle FX and tax rebate?
- After receipt, settle or hold the FX through your bank and keep the receipt vouchers; when claiming the export tax rebate, the received amount and currency should match the customs declaration, invoice and contract. Keep the contract, invoice and payment records consistent to avoid problems with FX reconciliation and the rebate.
Related terms
Sources: https://www.chinatax.gov.cn/ · https://2go.iccwbo.org/ucp-600-uniform-rules-for-documentary-credits-config-1+book_version-Book/