A T/T payment, short for telegraphic transfer, is an electronic bank-to-bank wire used to settle an international purchase. When an invoice says “payment by T/T,” the buyer is being told to instruct their bank to wire funds directly to the seller’s bank account, usually through the SWIFT network. The word “telegraphic” is a holdover from the 1800s, when banks sent payment instructions by telegraph; today the term simply means a standard international wire transfer. For anyone importing or exporting, the real question isn’t the definition. It’s when in the deal the T/T gets sent, who absorbs the fees, and what happens if the money goes to the wrong place.
How a T/T Actually Works
A T/T is an instruction from the buyer telling the sending bank to debit the buyer’s account and credit the seller’s account at a different financial institution, often in another country. No paper checks or drafts change hands. The payment travels electronically and typically completes within one to five business days, depending on time zones, currency conversion, and how many banks sit in the routing chain.1Citi.com. How Long Does a Wire Transfer Take?
The buyer submits a wire request at their bank or through online banking with the seller’s banking details, the amount, and the currency. The bank debits the buyer’s account immediately for the transfer amount plus its sending fee.2Chase. How to Wire Money It then sends a SWIFT message to the seller’s bank. If both banks have a direct relationship, the funds move in a single hop. More often, one or more intermediary banks sit in the middle, each processing the instruction and forwarding it on. Each intermediary adds processing time and may deduct a fee from the principal.
Unlike a letter of credit, which requires a bank to verify shipping documents before releasing payment, a T/T is a straight funds transfer. The bank moves money because the buyer said so, not because trade documents met contractual conditions. That simplicity makes T/T faster and cheaper than an L/C, but it also means one party always carries more risk. Which party depends on when the T/T is sent relative to shipment.
One feature to understand up front: once a sending bank releases a T/T, the payment is effectively irrevocable. Under Uniform Commercial Code Article 4A, a payment order cannot be canceled after the receiving bank has accepted it unless the bank agrees or the payment resulted from a specific type of error, such as a duplicate or misdirected order.3Legal Information Institute. UCC Article 4A – Funds Transfer Federal Reserve Fedwire rules echo this: once a receiving bank’s account is credited, that credit is final.4eCFR. 12 CFR Part 210 Subpart B – Funds Transfers Through the Fedwire Funds Service
T/T Timing Structures in Trade Contracts
Seeing “T/T payment” on a proforma invoice tells you how the money moves, not when. Timing is where the real negotiation happens, and it determines which side bears the financial risk. Most international deals use one of four structures.
Full Advance Payment
The buyer wires 100% before the supplier begins production or ships the goods. Safest for the seller, who collects payment before committing any resources. Riskiest for the buyer: if the supplier delivers defective goods or fails to ship, recovering prepaid funds from a foreign bank account is very difficult. Full advance T/T tends to appear in small orders, first-time trading relationships, or when the buyer has little leverage.
Split Payment (Deposit Plus Balance)
The most common structure in manufacturing splits the total into two T/T payments. A typical arrangement is 30% at contract signing and 70% either before shipment or against a copy of the bill of lading. The deposit covers the supplier’s raw materials and labor and signals the buyer’s commitment. Where the balance sits determines who holds leverage at the critical moment.
If the 70% is due before shipment, the supplier collects the full amount before the goods leave the factory, and the buyer relies on trust and inspection reports. If the 70% is due against a copy of the bill of lading, the supplier ships first and sends the buyer the B/L as proof, and the buyer wires the balance knowing the cargo is on the water. The deposit percentage itself is negotiable. Experienced importers sometimes push for 20% down, while suppliers producing custom goods may insist on 50%.
Payment After Shipment
The buyer wires the full amount after receiving shipping documents (typically a B/L copy, commercial invoice, and packing list) but before physically receiving the goods. Better for the buyer than full advance, because the documents prove the goods were shipped, but the seller still collects before the buyer can inspect the cargo at destination.
Open Account
The seller ships and invoices for payment at a later date, commonly net 30, 60, or 90 days. The buyer settles by T/T on the due date. Open account carries the highest risk for the seller, who has surrendered the goods and must trust the buyer to pay on schedule. This arrangement is most common with long-established partners or where competition forces exporters to extend credit.5International Trade Administration. Methods of Payment
Information the Seller Must Provide
One wrong field on a wire can delay payment by days or route funds to the wrong account. The seller should give you all of the following on their proforma invoice or a separate banking sheet:
- Beneficiary name and address: the seller’s full legal name exactly as registered with their bank, plus their physical address.
- Bank name and branch address of the seller’s financial institution.6U.S. Bank. What Information Do I Need to Send an International Wire Transfer?
- SWIFT/BIC code: an 8- or 11-character code identifying the specific bank and branch globally. SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication, the network that carries most international wire instructions.7Bank of America. How to Do an International Wire Transfer with Online Banking
- Account number or IBAN: in Europe and many other regions, the account is identified by an IBAN (International Bank Account Number), a standardized format that includes the country code, bank identifier, and account number. Countries that don’t use IBANs (including the U.S. and China) rely on the standard account number.
- Transfer amount and currency, and whether the funds should arrive in the sender’s or recipient’s currency.
Some countries also require a purpose-of-payment code. India, China, and several others mandate that incoming transfers include a code or description explaining why the money is being sent (for example, “payment for exported goods” or “service fees”). If it’s missing or wrong, the receiving bank may reject the transfer or hold it for manual review. Ask the seller’s bank for the exact code.
Banks are also required by the Bank Secrecy Act’s Travel Rule to collect and retain specific information about the sender and recipient for any wire of $3,000 or more. That information follows the payment through every bank in the chain and must be retained for five years.8FFIEC BSA/AML InfoBase. Assessing Compliance with BSA Regulatory Requirements – Funds Transfers Recordkeeping
Fees, Exchange Rates, and Charge Codes
T/T costs come from three sources, and all three can chip into a trade deal’s margin.
The sending bank charges a flat fee for the outgoing wire. At major U.S. banks, that typically runs $25 to $50 for an international transfer, with online submissions usually cheaper than branch visits. Intermediary banks may deduct their own processing charge from the funds in transit. The receiving bank often charges an incoming fee as well, commonly around $15. Total banking cost on a single T/T can reach $75 or more before any currency conversion.
Who absorbs the fees is negotiable, and international wires use three standard SWIFT charge codes to formalize it:
- OUR: the sender pays all fees, including intermediary charges. The beneficiary receives the full amount with no deductions.
- BEN: the beneficiary pays all fees. Every charge along the chain is deducted from the transfer amount, so the seller receives less than the invoice figure.
- SHA (shared): the sender pays their own bank’s fee, and the beneficiary absorbs any intermediary or receiving bank fees. This is the most common default for commercial transfers.
The charge code matters more than it looks. If a supplier’s invoice says $50,000 and the contract specifies BEN, the supplier might receive only $49,930 after deductions. On tight-margin goods, that shortfall can trigger disputes about whether the invoice was fully paid. Spell out the charge code in the purchase agreement.
Currency conversion adds a second cost that’s easier to miss. The converting bank applies its own exchange rate, not the mid-market rate on financial news sites. Banks add a spread to the wholesale interbank rate, and that spread is where they earn a significant share of their revenue on international transfers. On a $100,000 payment, a 0.5% spread costs $500, often more than all the wire fees combined.
Digital transfer platforms such as Wise offer the mid-market exchange rate with a transparent percentage-based fee (starting around 0.41% of the transfer amount), which can be substantially cheaper than a traditional bank wire on certain corridors. Transfer limits may not accommodate large commercial payments, and many suppliers still require payment from a recognized bank account.
Compliance Screening and Why Payments Get Delayed
Even a perfectly formatted T/T can get held up by compliance checks. Every U.S. bank is required to screen international wires against the Office of Foreign Assets Control (OFAC) Specially Designated Nationals list before processing. If a name, address, or other detail resembles an entry on the sanctions list, the bank flags the transaction for manual review.9Office of Foreign Assets Control. Assessing OFAC Name Matches
A flag doesn’t automatically mean the payment is blocked. If the compliance review clears the transaction, it proceeds. If the bank determines the payment involves a sanctioned party, the funds are frozen and the bank must report the blocked transaction to OFAC within 10 business days.10Office of Foreign Assets Control. Filing Reports with OFAC
Compliance holds typically add one to three business days to a transfer. If a supplier has a common name or is based in a country with heavy sanctions activity, build extra time into the payment schedule. Banks generally cannot tell you that a compliance hold is the reason for a delay, so unexplained slowdowns on certain corridors are often OFAC-related.
Wire Transfer Fraud and Recall
The irrevocability that makes T/T attractive for sellers is exactly what makes it dangerous when fraud enters the picture. Business email compromise is the most common attack vector, and it targets the routine nature of trade payments. FinCEN has identified three scenarios importers and exporters should watch for:11Financial Crimes Enforcement Network. FinCEN Advisory FIN-2016-A003
- Supplier impersonation. A criminal accesses or spoofs a supplier’s email and tells the buyer the supplier’s bank details have changed. The buyer wires the balance to a criminal-controlled account.
- Executive impersonation. A hacked or spoofed email from a company executive tells finance to process an urgent wire to a new beneficiary.
- Slight email alteration. The fraudulent email comes from an address nearly identical to the real contact’s, with one character changed. Easy to miss on a routine payment.
Red flags include wire instructions marked “urgent” or “confidential,” payment to an account with no prior transaction history, instructions that arrive with very little time to verify, and banking details that differ from what you’ve used before with the same supplier. The single most effective defense is a standing policy of confirming any change in banking details by phone, using a number you already have on file rather than one from the suspicious email.
If you do send a T/T in error (fraud, duplicate, wrong amount, canceled deal), your ability to recall it depends almost entirely on speed. Under UCC Article 4A, a sender can cancel a payment order only if the cancellation reaches the receiving bank before it accepts the order.3Legal Information Institute. UCC Article 4A – Funds Transfer After acceptance, cancellation requires agreement from the bank, and once the beneficiary’s bank has credited the seller’s account, cancellation only works in narrow circumstances such as duplicates or misdirected payments.
In practice, a recall means your bank contacts every institution in the chain and asks each to reverse its leg. The receiving bank then has to ask the beneficiary to authorize the return, which they’re under no obligation to do.12SUNY RF. Follow-up and Cancellation Recall Procedures for Wire Transfers and Foreign Drafts Banks charge recall fees on top of the original costs, and international recalls involving different time zones can take weeks. If you spot an error, call your bank within hours, not days. The window for a successful recall is measured in minutes once the funds hit the correspondent network.
When T/T Isn’t the Right Tool
T/T is one of several payment mechanisms in international trade, and the right choice depends on deal size, the relationship, and each side’s risk tolerance.
A letter of credit offers more protection for both sides. The buyer’s bank guarantees payment to the seller, but only after the seller presents documents proving the goods shipped according to contract terms. The tradeoff is cost and complexity: L/C fees typically run 1% to 3% of transaction value, documentation is exacting, and the process can add weeks to a deal. L/Cs make the most sense for large first-time transactions, high-risk destinations, or deals where neither party can absorb the other’s default.5International Trade Administration. Methods of Payment
For smaller or mid-sized transfers, digital platforms compete with traditional wires by offering mid-market exchange rates and percentage-based fees. On a $10,000 transfer, a platform charging 0.5% costs $50, potentially less than a single bank wire fee before any exchange rate markup. The limitation is that many platforms cap per-transaction or daily amounts below what a six-figure commercial payment needs, and some suppliers or trade finance arrangements require funds to originate from a traditional bank.
A Note on Personal Transfers
If you’re sending a T/T for personal reasons rather than a trade transaction, federal law adds protections that don’t apply to business payments. The CFPB’s Remittance Transfer Rule under Regulation E covers electronic transfers requested by consumers for personal, family, or household purposes. Transfers requested from business or commercial accounts are excluded.13Consumer Financial Protection Bureau. Regulation 1005.30 – Remittance Transfer Definitions
For covered consumer transfers, your bank or transfer provider must disclose the exact exchange rate, all fees (including estimated third-party fees), and the total the recipient will receive before you authorize the payment.14eCFR. 12 CFR Part 1005, Subpart B – Requirements for Remittance Transfers If something goes wrong, you have 180 days from the disclosed availability date to report an error, and the provider must investigate and resolve it within 90 days. If the provider confirms an error, it must correct the problem or refund you within one business day of receiving your instructions on the remedy.15eCFR. 12 CFR 1005.33 – Procedures for Resolving Errors
Business-to-business T/T payments in international trade don’t get these protections. Importers and exporters rely on their contract terms, the timing structure they negotiated, and their own due diligence on the counterparty. That’s what makes the choice of when the T/T goes out — advance, split, after shipment, or open account — the most consequential decision in the whole payment.