Verification tells you whether a supplier is real. Payment structure decides what happens to your money when something still goes wrong. Most losses are decided by how the first transfer was made, not by who it went to.
Whatever method you use, the aim is the same: never let the amount you have paid exceed the value you can verify. A deposit buys the supplier's commitment to start production. The balance should buy goods that you, or someone acting for you, have actually seen. Every method below is just a different way of enforcing that gap.
| Method | Protection | Cost and friction | Best for |
|---|---|---|---|
| Telegraphic transfer (TT / wire) | None built in. Protection comes from how you split the payments. | Low bank charges; quick once the supplier is set up | Verified suppliers; repeat orders |
| Letter of credit (LC) | Strongest. The bank pays only against compliant documents. | Highest fees; slow set-up; strict document matching | Large or high-risk orders; new, high-value relationships |
| Platform protection (e.g. trade assurance schemes) | Dispute process for orders paid inside the platform, within its terms | Platform fees can be built into the price; limits on what is covered | First orders found on that platform |
| Escrow or third-party payment services | Funds are held until you confirm receipt, subject to the service's rules | Service fee; slower; not offered for all order sizes | Small and medium first orders |
Treat the protection columns as the broad shape, not a guarantee. Platform and escrow schemes each have their own eligibility rules, time limits and exclusions, and you should read them before relying on them for a specific order.
The most common structure for a new supplier relationship is a deposit before production and the balance before shipment, often around 30% and 70%. The percentages move with the relationship and the product, but the shape should not.
Paid against a written purchase order and proforma invoice, after the sample is approved and not before.
A pre-shipment inspection, by you or a third party, against the agreed specification. See our inspection checklist.
Pay the balance once the inspection passes, and ideally against a copy of the bill of lading or airway bill rather than a promise.
A big deposit is the supplier's insurance and your exposure. If they ask for more than a third upfront from a buyer they have never worked with, ask what that extra money is for. The honest answer is usually raw materials, and a partial raw-materials payment can sometimes be negotiated in stages.
Import payments from India go through an authorised dealer (AD) bank, and banks generally want paperwork before they release foreign currency: the supplier's invoice or proforma, your IEC, and details of the goods and the beneficiary. Rules on advance payments, and on the documents the bank must later see to close out the transaction, are set by the RBI and the bank's own policy. The practical advice is to speak to your bank's trade-finance desk before you agree a payment schedule with the supplier, so that you promise only what the bank will actually do. If you have not yet registered as an importer, start with our IEC guide.
Your supplier quotes in dollars or yuan; you earn in rupees. Between the quote and the balance payment, the exchange rate can move enough to wipe out a thin margin. Two sensible habits: build a small exchange-rate buffer into your landed-cost sums (our calculator helps with that), and ask your bank about a forward contract if a large balance is due weeks away. Also ask the bank what spread and fees apply to the transfer, as these differ between banks.
This guide is general information, not financial or legal advice. Foreign-exchange and banking rules change; confirm current requirements with your authorised dealer bank.
A telegraphic transfer (TT) is the standard way trade is paid and is safe when it goes to a verified company account, matches the invoice, and is split so that you do not pay everything before the goods are inspected. It offers no built-in recourse if something goes wrong, which is why the structure around it matters.
It gives the strongest protection but costs more, takes longer to set up, and is strict about documents, so a small mismatch can delay payment. Many first-time importers of modest value use a split TT or a platform protection scheme instead, and reserve LCs for larger or repeat orders. Your bank can quote the cost.
Stop and treat it as a serious red flag. The beneficiary on your payment should match the company on the business licence and the invoice. Requests to change bank details mid-deal, or to pay a third party, are a common pattern in payment fraud.
In practice, supplier payments are made in a foreign currency, usually US dollars, and sometimes Chinese yuan. Your authorised dealer bank converts the rupees at its rate. Ask the bank what rate and fees apply before you commit to a price in a particular currency.
Samples are small, so the cost of a loss is small too, but the same checks apply: pay a company account, keep the invoice, and pay through a platform protection scheme if you found the supplier on a platform that offers one.
Send us the proforma invoice and the supplier's details before you pay. We will tell you what looks right, and what does not.
