Both remittance and collection are credit provided by the buyer and seller to each other according to the trade contract, so they belong to commercial credit. The payment method can be divided into two types: forward remittance and reverse remittance according to the flow of funds and the direction of payment instrument transmission. Forward remittance means that the flow direction of funds is the same as the direction of payment instrument transmission. The remittance method adopts the forward remittance method. Reverse remittance means that the flow direction of funds is opposite to the direction of payment instrument transmission. The collection method adopts the reverse remittance method.
Remittance, also known as remittance, refers to the payer actively remitting funds to the payee through a bank or other means. If the payment and collection of cross-border trade payment is made by remittance, the buyer generally remits the payment to the seller through a bank according to the conditions (such as receipt of documents or goods) and time agreed in the contract.
In the remittance business, there are usually four related parties.
(1) Remitter.
The remitter refers to the person who remits the funds. In the import and export transactions of cross-border e-commerce, the remitter is usually the importer.
(2) Payee (Beneficiary).
The payee is the person who receives the money. In the import and export transactions of cross-border e-commerce, the payee is usually the exporter.
(3) Remitting Bank.
The remitting bank is the bank that is entrusted by the remitter to remit the money. It is usually a bank in the import place.
(4) Paying Bank.
The paying bank is the bank that is entrusted by the remitting bank to pay the remittance. Therefore, it is also called the paying bank. In cross-border trade, it is usually a bank in the export place.
When the remitter entrusts the remitting bank to handle the remittance, he/she needs to submit a remittance application. This application is called a contract between the remitter and the remitting bank. Once the remitting bank accepts the application, it is obliged to notify the remitting bank in accordance with the instructions in the remittance application. There is an agency contract between the remitting bank and the remitting bank in advance. Within the scope of the agency contract, the remitting bank is obliged to pay the remittance to the remitting bank.