Letter of credit - an obligation assumed by the bank on behalf of the buyer (applicant) to pay the amount of the letter of credit in favor of the seller (beneficiary) after the latter has provided all the necessary documents that meet the terms of the letter of credit on time.
The peculiarity of the letter of credit is that the bank assumes the obligation to pay for the goods to the seller instead of the buyer. Letter of credit is the safest and most common method of settlements between partners, helping to significantly reduce risks.
LETTER OF CREDIT ADVANTAGES:
Used as a payment security tool in many countries around the world
Significant reduction in the risk of non-payment or late payment for the delivered goods
Reducing the time interval between the shipment of goods (provision of services) and the moment of receipt of payment
Ability to avoid upfront payments
Payment is made only after the submission of documents in the amount and within the terms provided for in the letter of credit
RATES FOR SERVICING LETTERS OF CREDITS (EXCEPT standby letters of credit):