Telegraphic Transfer (T/T) remittance method for buying Japanese Used Car-

Telegraphic Transfer sometimes or abbreviated as Telex Transfer or simply T/T is a simple and fastest legal way of dispatching money overseas through any bank with Forex facility. It involves the remittance of funds between the banks using electronic coded messages. This advance payment method is usually used while buying Japanese used cars. The method has long been a means of communication between banking institutions. Used car exporters from Japan prefers to deal through Telegraphic Transfer as the mode of payment in lieu of their used cars sold to the importers in different countries across the world.

For dispatching message, SWIFT (Society for Worldwide Interbank Financial Telecommunication) is used, which is an electronic communication system. This electronic method of fund transferring is mainly used for overseas wire transaction; a small fee is associated with the transfer. It is one of the most reliable and fast method to send or receive electronic funds. The message provides the receiving bank with the information of currency, amount, date of payment, the recipient name and payment instructions.

Telex Transfer in Japan is a financial term used for quoting retail exchange rates, and it is divided into 3 different rates, which are stated in yen, from quoting bank:

• Telegraphic Transfer Middle rate (TTM): The mid price can simply be defined as the average of the bid and offer prices quoted. It is the price between the best price quoted by the seller of the stock and the best price quoted by the buyer of the stock.
  This price is rounded up to the nearest trade-able price on the exchange system as per convenience.
• Telegraphic Transfer Selling rate (TTS): The offer or ask price is defined as the price which the seller quotes for his/her stock. It can be fix or negotiable. Fix price means the seller will not change the price once quoted. Negotiable price means the seller provides opportunity to the buyer to convince him to a lower price than what was actually quoted. The difference between ask and the bid price is called the spread.
• Telegraphic Transfer Buying rate (TTB): The bid price is the highest price that a buyer is willing to pay for the stock.

It is one of the most reliable and fast method to send or receive electronic funds. The message provides the receiving bank with the information of currency, amount, date of payment, the recipient name and payment instructions.

Here are few advantages of Telegraphic Transfer-

• T/T method is fixed amount system which is independent of transaction amount and it is possible to deposit as a foreign currency and can avoid exchange risk.
• No security is required while importing.
• It can choose the export earnings before or after shipping and it is effective to move up the payment period to installment receipt.
• You need to pay only remittance service fee and telegraphic cable service fee.

Few disadvantages of the Telegraphic Transfer system:

• Export earning can be received at the right time, by confirming the payment deposit and payment order (P/O) at the same time.
• As TT is a payment in advance, so in case if the supplier is dishonest, it could create problem for the importers of used cars. Thus, it is highly recommended to go for a safer form of payment, especially if you are trading with an exporter for the very first time.
• Since the system has no bank involved and deals with the creditability of the importer, there is a risk of loss of payment, so before sending a B/L, there must be a procedure to confirm payment being deposited.
• The payment could be canceled therefore, a schedule notice and the actual deposit have to be confirmed in advance.

The middle rate is the average of the buying and selling rate. For example, the USD is quoted with a spread of 2 JPY, so if the mid-market rate is 100 JPY = 1 USD, the rates are as follows:

• TTS: 101 JPY: bank will charge more than mid price to sell USD.
• TTM: 100 JPY: average, bank does not trade at this price.
• TTB: 99 JPY: bank will pay less than mid price to buy USD.

These rates are published daily by major Japanese banks, and used for accounting and tax calculations, in addition to retail use.