Quick Answer
T/T (Telegraphic Transfer) is a payment method in which the buyer wires payment through a bank directly to the seller’s account. It is simpler and cheaper than a letter of credit and one of the most common payment methods in international trade. T/T risk depends on when payment is made: payment before shipment (T/T in advance) favors the seller, payment after shipment favors the buyer, and in practice a deposit plus balance is the usual compromise, such as “30% deposit, 70% against copy of B/L”. In Taiwan, foreign exchange receipts, payments or transactions equivalent to NT$500,000 or more must be reported under the Central Bank’s Regulations Governing the Declaration of Foreign Exchange Receipts and Disbursements or Transactions.
Three Common T/T Arrangements
| Arrangement | When payment is made | Favors | Best for |
|---|---|---|---|
| T/T in advance | Full payment before shipment | Seller | First orders, small orders, custom products |
| Deposit + balance | Deposit on order, balance before shipment or against copy of B/L | Compromise | The most common long-term arrangement |
| T/T after shipment | Within a set number of days after shipment or arrival | Buyer | Trusted long-term customers |
T/T or Letter of Credit?
| Comparison | T/T | Letter of credit (L/C) |
|---|---|---|
| Procedure | Simple | Complex, with document examination |
| Cost | Low | Higher (issuing, advising, negotiation fees) |
| Payment security | Depends on timing and mutual trust | Bank undertaking; pays against complying documents |
| Best for | Trusted, smaller or long-term deals | First large deals, buyers of unknown credit |
For letters of credit, see What Is a Letter of Credit?
How to Write Payment Terms
On the contract or proforma invoice, spell out:
- Percentages and timing: for example, “30% deposit by T/T upon order confirmation, 70% balance by T/T against copy of B/L”.
- Currency and bank details: beneficiary name, account number, SWIFT code.
- Bank charges: who pays the remitting and intermediary bank fees.
With “payment against copy of B/L”, the seller usually releases the original bill of lading or arranges a telex release only after receiving the balance; see What Is a Bill of Lading?
Taiwan’s Foreign Exchange Reporting Rules
Under the Central Bank’s Regulations Governing the Declaration of Foreign Exchange Receipts and Disbursements or Transactions:
- Owners or users of funds in Taiwan with foreign exchange receipts, payments or transactions equivalent to NT$500,000 or more must report them.
- The reporting party must truthfully complete the declaration based on contracts and supporting documents, and file it with the Central Bank through a designated bank.
- Companies can settle directly up to a certain cumulative annual amount; above that, the bank must verify supporting documents.
For actual reporting procedures and thresholds, follow the Central Bank’s rules and your bank’s guidance.
Protect Against Payment Fraud
A common scam in international trade is “impersonating the seller and announcing a change of bank account”. When you receive a notice of new bank details, always verify through a phone number or channel you already know; never wire money based on an email alone.
How Tang Sugar Can Help
Tang Sugar’s triangular and multilateral trade service arranges payment terms (L/C, T/T) and invoice structures to suit each transaction, keeping logistics, payments and documents consistent. Contact us.
FAQ
What is T/T payment?
Telegraphic transfer: the buyer wires payment through a bank directly to the seller’s account. It is simple and low-cost.
What is the difference between T/T in advance and T/T after shipment?
T/T in advance is paid before shipment and protects the seller; T/T after shipment is paid after shipment or arrival and favors the buyer.
How are T/T payment terms usually written?
Commonly as a deposit plus balance, for example 30% deposit by T/T on order and 70% balance by T/T against a copy of the bill of lading.
Must foreign currency payments be reported in Taiwan?
Under the Central Bank’s reporting regulations, foreign exchange receipts, payments or transactions equivalent to NT$500,000 or more must be reported through a designated bank.
How is a wire transfer different from a domestic bank transfer?
A domestic transfer usually moves money between accounts in the same country and currency; a T/T sends money across borders or currencies through systems such as SWIFT, with remittance fees, intermediary bank charges, currency conversion and longer settlement times.
What do OUR, SHA and BEN mean for wire transfer charges?
They set who pays international transfer fees: OUR means the sender pays all charges; SHA means each side pays its own bank’s charges; BEN means the beneficiary pays all charges. Agree on this with the buyer before collecting payment to avoid receiving less than invoiced.
Further Reading
- What Is a Letter of Credit?
- International Trade Documents Explained
- What Are the Risks of Triangular Trade?
- What Is L/C Negotiation?
Sources
- Central Bank of the Republic of China (Taiwan) regulations database: Regulations Governing the Declaration of Foreign Exchange Receipts and Disbursements or Transactions (in Chinese)
- Central Bank of the Republic of China (Taiwan): Use regulated financial institutions for foreign exchange and remittances (in Chinese)
