In international trade, when remittance is used to settle payment, banks only provide services. Therefore, the use of remittance depends entirely on the trust between the buyer and the seller. Whether the buyer pays on time after the seller delivers the goods or hands over the documents depends on the buyer’s credit. Therefore, the nature of remittance belongs to commercial credit.
In international trade, remittance is usually used for businesses such as payment in advance, cash with order and open account. For the seller, payment in advance and cash with order means that the seller receives payment before delivery, and the funds are not backlogged, which is most beneficial to the seller; on the contrary, when open account trade is adopted, for the seller, delivery is first and payment is collected, and the seller not only has to occupy funds but also bears the risk of non-payment by the buyer. Therefore, it is not good for the seller, but most beneficial to the buyer. In addition, remittance is also used to pay deposits, installments, final payment of goods and commissions.
Among these three remittance methods, the most commonly used one in the world is telegraphic transfer (T/T).