The danger is not abstract. The FBI's Internet Crime Complaint Center logged business email compromise as the second largest category of reported loss in the United States in 2025, at $3.04 billion, with an average loss above $122,000 per complaint and 86 percent of that money moving by wire transfer or ACH. The figures are US-reported, but the pattern is global, and cross-border supplier payments sit squarely in its path. The money leaves fast, and once it lands in the wrong account it is usually gone. The good news is that the defenses are boring and well understood. They start before you choose a payment method at all.
Fix the deposit structure before you pick a method
The working standard for a new supplier is 30 percent on order and 70 percent before the goods leave China, with the balance released against a pre-shipment inspection or a copy of the bill of lading. The first 30 percent gives the factory enough to buy materials and start the run. The remaining 70 percent is your hold on the deal. It stays in your account until you have evidence the goods exist and match what you ordered.
A supplier who demands 100 percent before production is asking you to give up that hold on day one. For a custom bulk order from a factory you have not worked with, that is not a normal request, and the right answer is to decline it. Narrow exceptions exist where full prepayment is reasonable, such as a sub-$500 sample, a stock item that ships the same week, or a platform order that holds your money in escrow. A $40,000 first run of custom goods is none of those.
Tie the balance to a checkpoint, not to the supplier's word that production finished. A third-party inspection at the factory before the 70 percent moves turns the payment into proof of work, and it gives you a documented reason to hold funds if the goods fail. We cover how that check works in our guide to AQL pre-shipment inspection.
Put the terms in writing before the first cent moves. A proforma invoice or purchase order should name the split, the milestone that releases the balance, the currency, and the exact corporate account that will receive the funds. Agree who pays the bank charges, since a wire sent with shared or beneficiary-pays charges can arrive light and stall a deposit on a technicality. Written terms earn their place twice over. They are the document you point to when a supplier later claims the deal was 50 percent upfront, and they are the reference that tells you instantly if a payment instruction has quietly changed.
The payment methods, ranked by how much they protect you
Channels differ mostly in one thing: how easily you can recover your money when the goods are wrong, late, or never shipped. Rank them by that.
A telegraphic transfer, the bank wire most factories ask for, is fast and cheap at roughly $30 to $50 a transfer, and it carries no built-in protection at all. Money sent is money gone. A wire is safe only when three things are already true: the supplier is verified, the terms are split rather than full prepayment, and an inspection gates the balance. Reserve it for relationships you have proven.
Alibaba Trade Assurance is platform escrow for orders placed through Alibaba.com with participating suppliers. Alibaba holds your payment and there is a dispute window after delivery, typically 30 days to open a case, during which Alibaba mediates and can claw funds back from the supplier's balance. One timing detail trips people up: the money is released to the supplier on shipment, not when you confirm the goods are good, so your protection runs through the dispute process rather than a simple held balance. Keep the payment and the messages on the platform, because paying any part outside it can void the coverage. It suits new Alibaba suppliers and orders under roughly $30,000.
Independent escrow works the same way for suppliers found off-platform: a third party holds your funds until agreed milestones are met, for a fee of about 1 to 4 percent. The protection is only as good as the escrow agent, so confirm the provider is a regulated entity in your own jurisdiction before you fund anything.
A letter of credit at sight is the strongest protection for large or first-time orders. Under the ICC's UCP 600 rules, your bank pays the supplier's bank only on presentation of compliant shipping documents, such as the bill of lading, commercial invoice and packing list, plus anything else you specify, including a third-party inspection certificate. It costs more in fees and paperwork, around 0.75 to 1.5 percent, and it earns its keep above roughly $50,000.
PayPal Goods and Services or a credit card gives you chargeback rights and a dispute window, at higher fees. Use it for samples and small orders. And treat Western Union, MoneyGram, or a wire to a personal account as a refusal, not a method. A factory that can only take payment that way is showing you the exit.
Match the channel to the order. Under $5,000, lean on Trade Assurance or a card. Between $5,000 and $50,000, a 30/70 telegraphic transfer to a verified corporate account with inspection, or Trade Assurance, fits most cases. Above $50,000 with a new supplier, the letter of credit pays for itself.
The fraud that empties first orders
The most expensive mistake is rarely the wrong channel. It is the right payment sent to the wrong account. Business email compromise works by getting between you and your supplier. A criminal who has read your email thread sends a message that looks like it came from your contact, often timed near a genuine invoice, saying the bank details have changed. You wire the deposit to the new account, the goods never move, and the real factory is still waiting to be paid. The FBI's 2025 data puts this near the top of reported payment loss, and the same report flags AI-written messages and voice cloning making the impersonation harder to catch.
Two habits stop almost all of it. First, the beneficiary on the wire must be the supplier's registered company, not an individual and not an unrelated trading company in a third country. If the factory you vetted is registered as a limited company in Dongguan and the account name is a personal name or a Hong Kong shell with no link to it, stop and ask why. Second, treat any change of bank details as hostile until you confirm it through a channel you already trust. Call the contact on a number you held before the change, not the number printed in the email that is asking you to switch.
If a payment does go to the wrong place, speed is the only thing that helps. Call your bank the moment you suspect it and ask them to recall the wire and contact the receiving bank. The reporting window that matters is the first 24 to 72 hours, before the funds are pulled out the other end. After that, recovery odds fall sharply, which is why the FBI's data shows so much of this money is never returned. Build the prevention in, because the cure barely exists.
Five checks before the deposit leaves your account
Run these in order. Each one is cheap. A lost deposit is not.
One, confirm the legal entity exists and that the bank account name matches it. China's national enterprise credit system and the factory's business license tell you the registered company name and scope, which is the name the receiving account should carry. Our guide to reading a Chinese factory business license walks through the fields. Two, use a split structure, never 100 percent upfront to a factory you have not worked with. Three, match the method to the order size and the relationship, using higher-protection channels for new suppliers and large sums. Four, verify every bank-detail change through a known channel before you send. Five, require a pre-shipment inspection and release the balance only after it passes. None of these is sufficient alone. Stacked, they push first-order risk down to something you can live with.
Confirm the factory and the account before the money moves
Every protection above rests on one fact being true: the company you are paying is the company that makes your goods. That is the fact a buyer working from a website and a chat handle cannot confirm from a desk on the other side of the world. Mila puts a verified English and Mandarin-speaking agent on the ground at the real factory. The agent runs a GPS-stamped video audit of the production site and checks the business license against the bank account the supplier gave you. The agent also holds the supplier to a bilingual NNN before any money moves and runs the pre-shipment inspection your balance payment should depend on, all inside one WhatsApp thread you watch and run. Once the money rail is set, our note on cross-border payment rails to China covers how the funds actually travel. The deposit you send after a verified audit is a payment to a confirmed factory, not a wire into the dark.
Sources: FBI Internet Crime Complaint Center, 2025 Internet Crime Report (released May 2026) (total reported losses near $20.9 billion; business email compromise the second largest loss category at $3.04 billion, up from $2.77 billion in 2024; average loss above $122,000 per complaint; 86 percent of BEC funds moved by wire transfer or ACH; AI-enabled impersonation and voice cloning cited as emerging enablers). International Chamber of Commerce, Uniform Customs and Practice for Documentary Credits (UCP 600) (the rules governing letter-of-credit payment against compliant shipping documents). Payment-channel norms (30/70 deposit structure, Trade Assurance escrow timing, order-size method mapping) reflect standard China-import trade practice.