Cross-Border Payments Master Guide — T/T, L/C, PayPal, WeChat Pay Compared
Fees, speed, risk, documentation, and tax across the 5 main payment methods, on one page

Hello, this is GreenFrog Seoul.

"I sent the 50% deposit by T/T, then the factory went dark."
"I paid for samples on PayPal — 6% fees and 2% FX gap erased 8% of the budget."
"I tried to pay direct on WeChat Pay; Korean cards were rejected, the FX filing was missed, and I got hit with a penalty assessment."

Among Korean sellers, "In China sourcing, margin is decided at the payment step" is settling in as conventional wisdom. In our 7+ years on the ground, 12–18% of seller losses don't come from price, logistics, or tariffs — they come from "the wrong payment method, FX, fees, and missing documentation." With identical POs and identical unit prices, the way you pay can swing realized net margin by 3–5pp.

Cross-border payment is not "the act of sending money" — it is a "5-axis decision: fees, speed, risk, documentation, and tax." None of the 5 main methods (T/T, L/C, PayPal, WeChat Pay, Alipay) is the answer; the right choice changes per order based on amount, relationship, timing, and documentation requirements. Sellers who systematize the 5-axis decision save 3–5% of annual revenue versus sellers running default-T/T everywhere.

Today we condense GreenFrog Seoul's 10-stage cross-border payments guide — refined over 7+ years on the ground with Korean e-commerce / OEM sellers — onto one page. Method comparison, T/T, L/C, PayPal, WeChat Pay, FX, documentation, fraud prevention, mediator escrow, and tax — including where the seller's job ends and where mediation steps in.

1. Why payments matter — the 5 places payments-blind sellers break

Payments aren't "a banking task" — they are "the area where Korean sellers, if they don't know it, repeatedly take losses across orders, FX, and documentation." Five gaps that break sellers without a payments system:

2. Stage 1: The 5 payment methods at a glance — "no winner, only matches"

There are 5 main ways to pay a Chinese factory. Read the fees, speed, risk, documentation, and tax across all five, then match the right one per order.

5-method comparison

4 method-matching rules

• Samples / small (≤5M KRW) → PayPal or Alipay — speed and dispute protection first
• Mid-size (5–50M KRW) → T/T or Alibaba Trade Assurance — fees / documentation balance
• Large (50M+ KRW) → T/T splits + mediator escrow — risk diversification
• Very large (100M+ KRW) → consider L/C — costs more, but minimizes fraud / non-shipment risk

3. Stage 2: T/T (telegraphic transfer) — "most common, most traps"

T/T is the Korean seller's most-used method. Precisely because it's "the most common", it carries the most hidden traps.

5-step T/T flow

4 T/T traps

• Personal-account wire requests instead of company-name accounts: refuse on the spot — fraud and tax exposure
• Intermediary-bank fees of 15–50 USD come out of the receiving side — invoice amount ≠ amount received
• Default 50% deposit / 50% balance — 30/70 or 0/100 are negotiation cards
• FX filing kicks in at 5,000 USD per transaction — missing it triggers penalties and inquiries

4. Stage 3: L/C (letter of credit) — "safe at scale, but pricey and slow"

L/C is the method where the bank guarantees payment. It plays a safety-net role for 100M+ KRW orders and first transactions with new factories.

5 L/C elements

4 L/C use criteria

• Default-consider on any single 100M+ KRW order — the cost of T/T fraud exceeds L/C cost
• Strongly recommended for the first large order with a new factory — the bank effectively does first-line vetting
• Agree L/C terms in the PO contract upfront — re-negotiating later becomes a price-hike pretext
• Letter compliance drives 90%+ of L/C disputes — trade-document review by an expert is mandatory

5. Stage 4: PayPal / payment processors — "best for samples and small, bad for large"

PayPal, Payoneer, and Wise are optimal for samples and small orders. Above ~10M KRW, fees and FX gap stack up and they fall behind.

3-processor comparison

4 processor rules

• Wise is optimal for samples and small orders ≤5M KRW — fees ≤1%
• Use PayPal on first transactions with dispute risk — treat the 4.4% as insurance
• Switch from processors to T/T above 10M KRW — cumulative fees flip
• All processors are FX-filing-eligible transactions — "small enough to slip through" is a myth

6. Stage 5: WeChat Pay / Alipay — "domestic-China rails, Koreans must route around"

WeChat Pay and Alipay are domestic-China payment infrastructure. Korean sellers can't use them directly — routing structures are required.

4 routing structures

4 use scenarios

• Mediator-paid in-country is fastest for samples and small in-China payments ≤5M KRW
• Default 1688 direct orders to Alipay Zhibao (escrow)
• Always use Trade Assurance on Alibaba.com orders — free dispute protection
• Direct WeChat P2P transfers carry the highest FX-filing risk — avoid where possible

7. Stage 6: FX and fees — "1% per wire = 3% of annual revenue"

Same wire amount — shaving 1% off FX and fees returns 3% of annual revenue to margin (assuming annual purchases ≈ 3× revenue).

4-axis FX / fee optimization

4 practical FX tips

• Compare bank board rates vs specialists every time — 100–200 USD on a 10K USD wire
• Volume / repeat business is a corporate-negotiation card — preferred FX rates open up at 100M+ KRW relationships
• Manage order-time and payment-time FX separately — consider forwards on large deals
• Direct CNY beats USD-routing by 1–2% on FX — leverage Wise / specialists

8. Stage 7: Documentation and customs filing — "miss it and pay penalties / lose time"

A wire is not "the act of sending" — it is "the act that ends with documentation." Missing documentation cascades into customs delays, tax penalties, and refund refusals.

5 mandatory documents

4 documentation rules

• Keep PI / contract / MT103 as a 3-set for every wire — re-issuance is hard once lost
• FX filing kicks in at 5,000 USD per transaction or 10,000 USD cumulative — split wires aggregate
• Mismatch between invoice value and remitted amount: file an explanation immediately — customs trigger
• Retain documentation for 5+ years — tax audits go back retrospectively

9. Stage 8: Fraud and dispute prevention — "vanishing factories and quality claims"

The two biggest post-payment risks are vanishing and quality claims. Build the prevention checklist into pre / mid / post-wire stages as a system.

5 fraud / dispute defenses

4 dispute escalation steps

• 1st: Direct factory negotiation (email / WeChat within 14 days)
• 2nd: Alibaba / 1688 platform dispute filing (registered factories)
• 3rd: Mediator / on-the-ground consultant pressure via factory visit
• 4th: Chinese legal / arbitration (CIETAC) or write-off

10. Stage 9: Mediator escrow — "the safe-payment structure for Korean sellers"

Mediator escrow is a structure where "the receiving funds are released to the factory only after QC and shipment." The safety net Korean sellers can't easily run on their own — the mediator does it.

3 escrow structures

4 escrow rules

• Default escrow on first orders with new factories — no direct T/T
• Single 100M+ KRW orders go to escrow without exception — 1–2% mediator fee = insurance
• Specify "balance released after QC pass" with QC criteria in the PO contract
• Mediator does first-line dispute mediation — large time / cost savings

11. Stage 10: Tax handling — "VAT, income tax, and FX filing — the 3 axes"

Cross-border payments aren't simple settlement — they are "tax-reportable transactions." Map VAT, income tax, and FX filing in advance to block penalties.

4-axis tax check

4 practical tax rules

• Tag every wire with a clear reason code (import payment / service / other) — automates FX filing
• Keep invoice = remittance amount = customs declaration in 3-way alignment — mismatches trigger customs
• Quarterly FX gain/loss revaluation is mandatory for entities — missing it triggers penalties
• Tax accountant / customs broker collaboration becomes default at 500M+ KRW revenue

12. GreenFrog Seoul's payment-mediation service

The 10-stage guide above sits in the gap of "too much time, information, and on-the-ground channel required for a seller to run the 5-axis decision, documentation, and tax pieces alone every time." GreenFrog Seoul mediates the entire payment cycle from the seller's side via 7+ year on-the-ground consultants.

Mediation package

What this service changes

• Payment cost: 4.5% of revenue → 1.0% (method matching + FX optimization)
• Fraud / non-receipt rate: 4.2% → 0.3% (mediator-escrow effect)
• Penalty risk: 0.8% of revenue → 0.05% (documentation / tax discipline)
• Average dispute resolution: 6–12 months → 2–6 weeks (mediator first-line mediation)
• Year-one margin recovery: 3–5% of revenue (full 10-stage system effect)

13. Master cross-border payments checklist

What not to miss before, during, and after each wire.

Pre-wire checklist (method / docs / FX)

• Matched the right method to amount, relationship, and timing
• Verified company-name account and business registration
• Prepared invoice, PO contract, FX-filing form (3-doc set)
• Compared bank board rate vs specialist / Wise rate
• Pre-registered FX filing for transactions over 5,000 USD
• Picked mediator escrow or Trade Assurance for new factories
• Decided SHA vs OUR for intermediary-bank fees

Mid-wire checklist (execute / confirm)

• Forwarded MT103 to the factory immediately
• Got the factory's deposit slip in 1–3 business days
• Confirmed the gap between actual receipt and invoice (intermediary-bank fee)
• 50/50 (or negotiated split) deposit / balance schedule matches the contract
• Got B/L copy / QC results before wiring the balance
• Documented agreement on dispute reasons before wiring the balance

Post-wire checklist (documentation / tax)

• 5 docs (PI / contract / MT103 / Packing List / B/L) bundled in one folder
• FX-filing form / customs declaration matches the invoice amount
• FX gain/loss revalued and booked at quarter-end
• Booked under cost of goods / VAT / income-tax lines
• Documentation safely retained for 5+ years (digital + backup)
• 1st-stage negotiation opened within 14 days on disputes / claims
• Annual review of payment cost / FX / fees as % of revenue

Wrap-up — Margin is decided at the payment step

Compressed to one line each, the 10 stages:

• Stage 1 (Method comparison): T/T, L/C, PayPal, WeChat, Alipay — no winner, only matches
• Stage 2 (T/T): most common, most traps — default new vendors to mediator escrow
• Stage 3 (L/C): 100M+ / first big new-vendor deals — 1.5% cost is cheaper than 100% fraud
• Stage 4 (Processors): Wise ≤5M, PayPal where dispute risk exists — switch to T/T above 10M
• Stage 5 (WeChat / Alipay): not directly usable — route via mediator / Trade Assurance
• Stage 6 (FX / fees): 1% per wire = 3% of annual revenue — specialists / mid-market / corporate rates
• Stage 7 (Documentation / customs): 5-doc set + FX filing — missing it costs 0.8%/yr
• Stage 8 (Fraud prevention): 18% recovery rate on vanishing — mediator escrow cuts risk to 1/14
• Stage 9 (Mediator escrow): balance released after QC — default for 100M+ / new factories
• Stage 10 (Tax): VAT / income / FX 3-axis mapping — avoids 1.2% retrospective assessment

China sourcing is a "margin is decided after the wire goes out" business. Same unit price, same invoice — once payment method, FX, documentation, and tax are systematized, payment cost drops from 4.5% of revenue to 1.0%, fraud rates from 4.2% to 0.3%, and year-one margin recovery hits 3–5% of revenue. Often, matching the 5 axes precisely matters more to ROI than negotiating a better unit price. GreenFrog Seoul mediates the seller's full cross-border payment cycle — from method matching to tax collaboration. Whether you're preparing your first China remittance or recovering from a T/T incident, reach out anytime.