Remittance

Remittance is a basic payment method in international trade, referring to the act of the buyer remitting payment to the seller through a bank. Its essence is commercial credit; the bank acts only as a payment intermediary and does not assume payment guarantee responsibility. Remittance mainly includes telegraphic transfer (T/T), mail transfer (M/T), and demand draft (D/D), with T/T being the most commonly used. It is often used in small-amount transactions, between buyers and sellers with long-term cooperation and high trust, for advance payment or balance payment, etc. Precautions: The seller needs to pay attention to the buyer's credit risk; if using open account (O/A) or cash on delivery, there may be a risk of losing both goods and money. The buyer needs to guard against the seller not shipping after receiving payment. Compared with letter of credit (L/C), remittance has lower fees and faster speed but lacks bank credit guarantee; compared with collection, remittance does not involve the bank's document presentation process, making it more flexible but riskier. In practice, it is often used in combination with L/C and collection, such as partial advance payment plus L/C.