The traditional cross-border payment methods often used in B2B cross-border trade mainly include the following:

1. Remittance

Also known as remittance, the payer voluntarily remits the money to the recipient through the bank or other channels, which is the simplest payment method. The remittance method is usually used for prepayment and cash on delivery. In addition, the remittance method is also used for the payment of small amounts such as deposit, final payment, and commission. The types of remittance are letter remittance (M/T), telegraphic transfer (T/T) and draft remittance (D/D).

Mail remittance (M/T): It refers to a remittance method in which a remittance bank sends a letter of attorney to an overseas remittance bank in response to the remitter's application, authorizing the payment of a certain amount to the beneficiary.

Telegraphic transfer (T/T): refers to a remittance method in which the remittance bank sends a pressurized telegram or telex to the overseas branch or agent to pay a certain amount to the beneficiary upon the application of the remitter.

Draft (D/D): The remitter uses payment instruments such as draft, promissory note or check to actively pay the payment to the payee.

Remittance nature:

Remittance belongs to Shunhui, because the transfer direction of the settlement tool used flows from the buyer to the seller, which is consistent with the flow of funds.

Remittance is a commercial credit, because using remittance, whether and when to perform payment obligations in accordance with the contract completely depends on the buyer's credit. assume responsibility for payment.

2. Collection

In import and export trade, the exporter issues a bill of exchange with the importer as the payer, and entrusts the exporter's bank to collect payment from the importer through its branch or agent bank in the importer. A collection is an inverse exchange because in a collection, the documents and documents used as settlement instruments are transmitted in the opposite direction to the flow of funds. In addition, collection is also a commercial credit. The bank handles it completely according to the seller's instructions. Whether the bank can receive the payment depends on the buyer's credit.

The most common types of collections are bare collections and documentary collections:

Clean bill collection: refers to the collection of financial bills without commercial bills. The collection of clean bills is mainly used for small-value transactions, prepayment for goods, installment payments, and collection of subordinate fees for trade.

Documentary collection: refers to the collection of financial documents with commercial documents or commercial documents without financial documents. The collection method is more favorable to the buyer, with low cost, low risk and small financial burden, and can even obtain financial financing from the seller.

3. Letter of Credit (L/C)

Refers to the written document that the bank (issuing bank) makes payment to the third party (the beneficiary) or its designated party with the prescribed documents in accordance with the requirements and instructions of the (applicant) or on its own initiative, and under the conditions of the letter of credit. , that is, a letter of credit is a conditional written document issued by a bank that promises to pay.

Type of letter of credit:

L/C at sight: refers to the L/C that the paying bank will perform the payment obligation immediately after receiving the documentary bill of exchange and the shipping documents in line with the L/C terms.

Deferred payment letter of credit: refers to the letter of credit in which the issuing bank promises to pay after a certain period of time when the beneficiary presents the documents.

Acceptance letter of credit: When the issuing bank or the paying bank receives the usable draft and documents that meet the requirements of the letter of credit, it will first perform the acceptance procedures on the draft, and then make payment on the due date of the draft.

Negotiable L/C: A L/C in which the issuing bank invites other banks to buy drafts and/or documents in the L/C.

Letter of credit features:

The letter of credit is a self-contained document. The letter of credit is not attached to the sales contract. The bank emphasizes the certification in written form that the letter of credit is separated from the basic trade when examining the documents.

The letter of credit is a pure document business, and the letter of credit is payment against documents, not the goods. As long as the documents are consistent, the issuing bank should pay unconditionally.

The issuing bank has the primary responsibility for payment. The information certificate is a kind of bank credit and a guarantee document for the bank. The issuing bank has the primary responsibility for payment.

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