INTRODUCTION

A. THE BASIC CONCEPT OF THE INTERNATIONAL PAYMENT SERVICE OF

THE COMMERCIAL BANKS
1. Definition
International payment means the performance of payment obligations and monetary benefits
arising based on economic and non-economic activities between individual organizations of this
country and individual organizations of other countries or between a country and international
organizations through the banking relations of the countries concerned.
2. Characteristics
Unlike domestic payments, international payments are not only governed by national laws
but also regulated by international laws and practices such as Uniform Law for Bill of Exchange
- ULB, Uniform Customs and Practice for Documentary Credit - UCP, Uniform Rules for
Collection - URC, The Uniform Rules for Bank to Bank Reimbursement Under Documentary
Credit - URR, International Commercial Terms - Incoterms. These international legal documents
and practices contribute to creating a level and fair playing field for entities involved in
international payment activities, avoiding unfortunate disputes.
International payments are influenced by exchange rates. The currencies used in international
payments are usually freely convertible and are considered strong during that period such as
USD, EUR, SDR, and JPY...
Except for import and export transactions of goods that are traded through the quota route,
international payment transactions are mainly carried out through the commercial banking
system. Therefore, to serve and develop international payment transactions, commercial banks
urgently need a lazy network of correspondent banks or branches abroad.
Payment activity is a type of service.
3. Role of international payment
- A For a commercial bank
International payments are a significant source of income not only in absolute quantity but
also in proportion. By providing international payment services to customers, the bank collects a
fee to offset the bank's expenses and generate the necessary business needs. Depending on the
payment method, competitive environment, and the level of trust of customers, the fee schedule
and service fee will differ quickly for different customers. International payment service fees
constitute the commercial bank's revenue and profitability.
International payment is also an important link in promoting the development of other
business activities of the bank such as foreign currency trading, import and export financing,
bank guarantee in foreign trade activities, and strengthening mobilized capital, especially capital
in foreign currencies. International payments increase the bank's income, expand the capital,
diversify services, and enhance the bank's reputation in the international financial market.
Therefore, the completion and development of payment activities play an important role in
banking activities, it is not only a pure payment service but also an indispensable stage in the
business chain, supplementing and supporting other business activities of the bank.
- For import-export enterprises
International payments are the final stage to completing foreign trade relations. Import and
export activities can only develop normally when payment is made and resolved. International
payments not only have the effect of maintaining foreign trade relationships but also the effect of
promoting stronger foreign trade.
Import and export business if payment activities are fast and safe, helping enterprises recover
capital quickly, contributing to reducing costs, and improving business efficiency of import-
export enterprises. International payment activities are carried out smoothly, also create reliable
relationships between businesses and banks, thereby creating favorable conditions for businesses
to be funded by banks in case enterprises lack capital, technical support for payment through
guidance, advising businesses, minimizing risks that may occur during the payment process with
partners.
International payment also plays a role in encouraging import and export enterprises to
increase the scale of operations, increase the volume of traded goods and expand transaction
relations with other countries, strengthen the position and reputation of enterprises.
- For the economy
International payment is a bridge connecting the domestic economy with the external world
economy, which has the effect of lubricating and promoting import and export activities of goods
and anomalies, foreign investment, attracting remittances, and other international financial and
credit relations. International payment activities are increasingly asserting their important role
and position in national economic activities in general and foreign economic activities in
particular. In terms of State management, international payment helps the State to concentrate
and manage domestic foreign currency sources, based on which foreign currency is used
effectively, creating conditions for the good implementation of the State's foreign exchange
management mechanism, effectively managing import and export activities according to the set
foreign trade policy.
International payments are often associated with credit financing relationships, which in turn
involve the movement of short-term capital flows from one country to another on a worldwide
scale. Thereby helping to solve capital needs in international payment transactions for countries
with unstable financial situations. International payments are associated with the operation of the
domestic banking system with foreign banks, with international financial institutions. Thereby,
helping the banking systems of underdeveloped and developing countries to access modern
payment transaction systems, while strengthening and expanding cooperation between banks of
this country and other countries, expanding direct and indirect investment activities. Thanks to
the development of international payment methods, the link between the domestic banking system
and other domestic banks have been expanded, forming a global linkage of the banking system,
which is a very important condition to both promote international relations and develop more and
more, as well as a condition for the formation of an economic and financial security system.
4. Instrument of international payment
4.1. Bills of exchange
- Definition:
A rebate is an unconditional demand order issued by one person to another person,
requiring that person, upon seeing the return, or a certain specific date, or to a determinable date
in the future to pay a certain amount to someone, either at the behest of one to pay another or to
the holder of the ballot.
- Classification of returns:
+ Based on the payment period of the coupon: Sight bills/ demand bills and Usance bills/ Time
bills
+ Based on the documents attached to the voucher: Clean bills and Documentary bills
(Documents against payment – D/P and Documents against acceptance – D/A)
+ Based on the transferability of the ballot: Nominal bills, Bearer bills, and Order bills)
+ Based on the signatory of the ballot: Commercial bills and Bank bills
- Form:

(1) Title
(2) An unconditional order to pay a determinate sum of money
(3) Drawee
(4) The time of payment
(5) The place where payment is to be made
 (6) Payee/ Beneficiary
(7) Date and Place of Issue
(8) Drawer
4.2. A Check/Cheque
- Definition:
A check is an unconditional payment order issued by the owner of a deposit account that
requires the bank to deduct money from his account to pay the person named on the check, to
pay at his behest, or to pay the person holding the check a certain amount in cash or by bank
transfer.
- Classification of Cheque
+ Based on the transferability of the Cheque: Nominal Cheque, Cheque to Bearer. Cheque to
Order.
+ Based on the form of Cheque: Generally Crossed Cheque, Specially Crossed Cheque, Non-
Crossed Cheque.
+ Based on the use of the Cheque: Transferable Cheque, Cash Drawing Cheque, Cash Cheque,
Traveller’s Cheque.
+ Based on the solvency of the check: Certified Cheque, Non–Certified Cheque.
- Payment process:
+ Cheque circulation through a bank:

BANK
(3) (4)
(5)
(1)
EXPORTER IMPORTER

(2)

(1) The exporter delivers the goods to the importer

(2) The importer signs a check is given to the exporter
(3) The exporter deposits a check in the bank for payment
(4) The bank collects the importer's money
(5) The bank pays the exporter
+ Cheque circulation through two banks:
 (1) The exporter delivers the goods to the importer;
(2) The importer issues a cheque to the exporter;
(3) The exporter deposits a cheque into the bank serving the exporter;
(4) The bank serving the exporter transfers the cheque to the bank serving the importer,
(5) The bank serving the importer collects the importer's money;
(6) The bank serving the importer transfers money to the bank serving the exporter,
(7) The bank serving the exporter pays the exporter
4.3. Payment Card
- Definition:
A payment card is a means of payment issued by banks and card-issuing organizations
for customers to use to pay for goods and services at points of supply of goods and services
signed payment contracts with banks, or withdraw cash at ATMs or correspondent banks to the
extent their deposit balances or credit lines are granted.
- Classification
+ According to the issuer: Cards issued by banks, cards issued by non-bank organizations
+ According to the payment mechanism: Credit Card, Debit Card (On-line Card, Off-line Card),
Link Card, Value Store Card
+ According to the scope of use: Domestic Card, International Card
- Payment process: An example of a credit card checkout process
 (1) Cardholder
The cardholder (the buyer) presents a credit or debit card to the merchant for payment.
This can happen directly, as when a card is swiped, tapped, chipped, or inputted manually in a
traditional brick-and-mortar store, or it can take place by phone or online.
(2) Merchant
The merchant (whom the buyer is trying to pay) sends a request through a payment portal
for the cardholder’s issuing bank to approve or decline the transaction. However, the
authorization request doesn’t go directly to the cardholder’s bank. Instead, the merchant sends
the required information through the merchant’s payment processor. (This is whom a business
hires to help them accept credit cards.)
(3) Payment Processor
The payment processor receives the merchant’s authorization request and transaction
information and forwards it to the appropriate credit card network (Visa, MasterCard, American
Express, or Discover).
(4) Credit Card Network
The credit card network receives the card information from the payment processor and
forwards it to the cardholder’s issuing bank (in the case of Visa and Mastercard) for
authentication and approval. This is the sense in which the credit card network is a “network”: it
facilitates the transaction by acting as a highway along which transaction data travels back and
forth between the payment processor and the issuing bank. American Express and Discover,
however, are both card issuers and card networks.
(5) Issuing Bank
 The issuing bank checks the card and transaction details against the cardholder’s line of
credit (if the payment is made with a credit card) or the cardholder’s account balance (if a debit
card), and then approves or declines the transaction. The issuer then sends its response back to
the credit card network. If it approves the transaction, the issuer also places a temporary hold on
the cardholder’s account for the amount of the transaction.
(6) Credit Card Network
The credit card network sends the issuer’s response to the payment processor.
(7) Payment Processor
The payment processor transfers the issuer’s response to the merchant’s payment portal.
(8) Back to Merchant
The merchant receives the issuer’s response (approved or declined) and issues a receipt to
the cardholder—which completes the transaction.
4.4. Promissory Notes
- Definition
A promissory note is an unconditional payment commitment signed by a person (deferred
purchaser, importer, etc.) to another person (deferred seller, exporter, etc.) to commit that, by a
specified period in the future, a certain amount will be paid to the beneficiary indicated on the
promissory note or at the behest of one person to pay another as provided in that promissory
note.
- Sample of Promissory Notes

4.5. Money Transfer Order

- Definition:
A money transfer order is an order sent by an account holder to a bank that asks the bank
to deduct money from its account to transfer to the beneficiary.
- Sample:
 5. Term of international payment
5.1. Currency conditions
The monetary condition indicates the agreement between the contracting parties on which
country's currency to use for the calculation and payment of contracts and regulates how to handle
when the value of the currency changes. The calculated and settled money may be the currency of
some of the parties involved in the operation. International and international payments can be the
money of a third country chosen by the parties as a means of payment.
Therefore, the parties will agree to use a strong and stable currency to facilitate payments
between the parties. However, this choice depends a lot on many factors such as trade practices,
views of the two sides on risk trends ...

5.2. Exchange guarantee conditions

Exchange guarantee conditions provide reserved conditions to ensure equality of
economic interests between the parties to the contract. In the purchase and sale contract, it must
be clearly stated that the calculation and conditions must ensure:
- Guaranteed conditions according to gold:
The condition of the gold guarantee is to use the money to calculate the fair value, which
at the same time stipulates the price of gold at that time as the basis of the guarantee. When
paying, if the price of gold changes compared to the time of signing the contract, the price of the
commodity and the corresponding contract value will be adjusted.
- Foreign exchange guarantee conditions: Foreign exchange guarantee conditions have
2 ways:
 + First, the parties agree to choose one currency to calculate and pay, and commit to
taking another currency (the currency is considered stable) to ensure that currency, determines the
exchange rate between the two currencies. If that rate changes, the fair value will adjust
accordingly.
+ Secondly, the parties agree to choose a currency with a relatively stable purchase to
calculate and take another currency pay, determining the exchange rate between the two
currencies. Until paying, if that rate changes, the contract value will adjust accordingly.
- Guaranteed conditions under the "basket of money"
Use some coins called a "basket of money". Use the value of the basket of money to
ensure the value of the foreign trade contract. When the value of the participating currencies in the
'money basket' changes, the whole basket changes, and the entire value of the contract must be
adjusted.
- Guarantee conditions based on international currency
The parties agree to choose one currency to calculate and pay the contract value, and at
the same time choose another currency as the currency to guarantee the contract. The total
contract value will be adjusted based on the difference between the exchange rate between the
two dollars on the payment date compared to the signing date.
- Guarantee conditions based on price fluctuations: Use the following two provisions
+ Firstly, the amount must be based on the volatility of the price index that changes
accordingly.
+ Secondly, the amount to be paid is based on the fluctuation of the price of the goods
itself in the market, or of the production cost of that commodity.
5.3. Sue the payment location.
The place of payment is where the payment is made, where the payment takes place (either in
the country of the exporter, in the importer, or possibly in the third country.
The choice of payment location where the surcharge depends on the characteristics of each
import and export contract, the payment method that the parties agree to use, and the position and
agreement of the parties. conditions for more efficient use of capital. And the payment location
in the importer's country will create conditions for importers to pay more smoothly and use
capital more efficiently.
In the current period, due to the strong development of science and technology and the
banking system around the world. Transferring money from payer to recipient on a worldwide
scale becomes very simple, fast, safe, and affordable. Therefore, the conditions of the payment
location are not as binding as before. The payment period is on the date of completion of
checking the payment documents within the specified time.
5.4. Payment period conditions.
 This condition specifies the time of the agreement that the paying party needs to make a
payment to the receiving party.
- Advanced Payment
The time of advanced payment between the time the exporter accepts the order from the
importing party before the delivery date. Under these conditions, the buyer will pay part or all of
the fair value to the seller.
This is how it is applied when two parties have a very trusting relationship, or branch
relationship, with each other. The advanced payment to finance the seller who lacks capital must
borrow from the buyer, the buyer has granted trade credit to the seller (usually in the case of
relatively long upfront periods and relatively large upfront amounts). In addition, advanced
payment is intended to ensure the performance of the buyer's contract (usually in the case of a
short upfront period and a small number of upfront payments).
- Time of payment
 The buyer pays the seller as soon as the seller completes the delivery of the goods to the
carrier at the designated place of delivery. Designated delivery places can be workshop
delivery (EXW), carrier delivery (FCA), and border delivery (DAF).
 The buyer gives money to the seller as soon as the seller completes the delivery of the
goods on the transport at the specified place of delivery. The most common is delivery in
the train tunnel (FOB), delivery on the train deck (FOD), delivery on the train car, and at
the border station of the seller's country.
 After completing the delivery, the seller completes the set of payment documents and
passes them to the buyer, the buyer pays immediately after receiving the set of
documents. The document is delivered to the buyer via international post, through the
captain, directly to the buyer or agent, and through the international banking system.
 The buyer pays the seller immediately after receiving the goods at the specified place or
port of destination.
- Deferred Payment
Paying later is after a certain time since the seller completes the delivery (as agreed by the
two parties), and the buyer will proceed to pay. help sellers consume goods faster, create
friendly relationships in business
5.5. Payment method conditions
This is one of the most important conditions in international payment conditions. The
payment method is the way that the buyer seems to pay the seller and the seller uses it to collect
the money. There are many different payment methods to choose from for collection or payment.
However, sellers and buyers choose which method comes from the requirements of both parties:
Sellers want to collect money quickly and buyers want to import goods in the right quantity,
quality, and on time.
Payment methods:
 - Payment methods without surcharges from shipments
The payment is not based on consignment documents but only relies on financial
correspondence such as money transfer letters, money transfer electricity, and drafts to make
payments. Then, the buyer's interests are guaranteed. There are breast shapes as follows:
+ Remittance
+ Open Account
+ Clean Collection
- Payment methods of surcharges from shipments
The payment is not only based on financial responsibility but also the response from the
shipment. The response from the consignment is indispensable to check carefully before paying.
Well, the seller's rights are more secure. There are the following sternums:
+ Documentary Collection
+ Documentary Credit
+ Authority to purchase)

- Commodity-based payment methods: Letter of Guarantee – L/G

+ Incoming and paid goods
+ Test completed
+ The goods come to pay part, the rest after the test results are completed.
The goods come to pay part, the rest after the test results are completed.
6. Methods of international payment
6.1. Payment in advance
- Definition:
In a “payment in advance” (also referred to as a “cash in advance”) transaction, the seller
gets paid before “delivery of goods” (e.g. shipment of goods, the arrival of goods, etc…Payment
in advance requires the buyer to pay prior the delivery of the goods.
- Participants:
+ Remitter
+ Beneficiary
+ Remitting Bank
+ Paying Bank
- Process
 (1) Commercial transactions. In the case of prepayment payment, commercial
transactions are the prepayment terms in the signed foreign trade contract. In the case of postpaid
payment, the commercial transaction is shown in the proof of delivery.
(2) Issue a money order (by mail or by phone) along with a spending authorization (if there is an
account opened at the bank) to the bank serving you. In Vietnam, money orders are made according to
the bank's pre-printed form. Customers only need to complete and accurately fill in the information in
the form and can transfer documents by mail (by paper), or by electricity (transferred through the e-
bank system applicable to the money transmitter who signs the agreement to use e-bank services with
the bank).

(1) The remittance bank transfers money abroad (the paying/reimbursement bank) by MT or
T/T at the request of the remitter after collecting the transfer amount and the transfer fee
of the money transmitter.
(2) The bank pays the money transfer to the beneficiary
- Modes of transition
+ Mail Transfer -M/T
+ Telegraphic Transfer (T/T)
- Methods of paying money-free transfer
+ Full costs are borne by beneficiaries
+ The money transmitter pays a fee to the bank transferring money
+ Full remittance costs are borne by the transferor
6.2. Open Account
- Definition
In an open account transaction, the seller ships or delivers goods and sends shipping
documents including invoices directly (not using a banking system) to the buyer without
receiving payment, and the buyer will pay at a future due date. The seller extends credit to the
buyer by allowing them to pay in arrears.
 - Features of payment methods:
This is a payment method without the participation of the bank in each delivery with the
function of being the account opener and executor of the payment.
Only open single-margin accounts, do not open parallel accounts. If the buyer opens an
account to record, the account is only a tracking account, with no payment value between the two
parties, in each payment
- Process

(1) The seller delivers the goods, or services together with sending the goods documents to
the buyer.
(2) The seller reports the debt directly to the buyer.
(3) The buyer uses the method of transferring money or issuing a check... to pay the seller
when it's time for payment
- Note when using the open account method
+ Uniform regulations on the amount of money recorded on the account
+ What is a seller's debit
+ Unify receives debts from the buyer is gì
+ Unify means of money transfer
+ Agree on payment time
+ Solve late payment cases
+ Resolve in case there is a discrepancy between the amount received and the amount
debited
6.3. Collection of payment
- Definition:
 A collection method is a payment method in which the seller, after completing the
delivery of the goods or providing a certain service to the customer entrusts his bank to collect
the amount from the buyer based on the seller's receipt.
- Parties involved
+ Principal
+ Remitting Bank
+ Collecting Bank
+ Payer (Drawee)
- Types of collection and payment process
+ Clean collection
+ Documentary Collection
 Clean Collection
- Definition
 Clean collection - is the collection of financial documents (Bills and Notes, checks, and
other similar documents used for payments) when they are not accompanied by commercial
documents.

- Process

(1) Enter into a contract of sale, including a payment clause stating the application of the
"clean collection" method.
(2) Exporter sends goods and sets of trade documents directly to the Importer payer
(3) The exporter submits a request for collection of the same set of financial documents
to the bank for collection to collect money from the Importer.
 (4) Remitting Bank prepares and sends orders for the collection of financial documents to
Collecting Bank to collect money from Importers.
(5) Collecting Bank announces the order to the Importer.
(6) Importer pays or accepts payments.
(7) Collecting Bank transfers proceeds or accepted promissory notes to Remitting Bank.
(8) Remitting Bank transfers money for collection or accepted promissory note to the
exporter.
 Documentary collection
- Definition
Documentary collection is the collection of financial documents accompanied by
commercial documents (invoices, transport and insurance documents, etc.), as well as a
collection of commercial documents only.
- Types of Documentary Collection
+ D/P: Documents against payment

+ D/A: Documents against acceptance

 - Process:

(1) The idea of combining the contract of sale in which the payment stipulates the method
of the collection with documents
(2) The exporter delivers the goods to the importer but does not deliver the goods
documents.
(3) The exporter shall send the draft and the set of goods documents to the entrusted bank
for collection of money from the importer.
(4) The bank asks the collector to make an order for collection and sends the same set of
documents to the collection bank.
(5) The collection bank notifies the collection order and presents the set of documents to
the importer.
(6) The importer complies with the order by way of Immediate payment by draft, check
the promissory note, or a promissory note or debt receipt
 (7) The collection bank shall hand over the set of commercial documents to the importer.
(8) The collection bank transfers money by collection, or the acceptance bill or debt
paper to the bank for collection.
(9) The bank asks for the remittance of the collection, or the acceptance bill or debt paper
to the exporter
6.4. Documentary Credit
- Definition:
A documentary credit (or letter of credit) is a definite undertaking of the issuing bank to
pay a complying presentation (presentation of documents). An issuing bank would pay a
beneficiary (normally the seller) if the documents presented comply with the terms and
conditions of the credit.
- Participants:
+ Traders
 Importers, also known as L/C requesters
 Export enterprises, also called sellers, beneficiaries
+ Banks
 Issuing Bank, also known as Opening Bank: This is a bank representing importers,
providing credit to importers. Open bank L/C is agreed upon, selected, and stipulated
by the two parties in the contract, if there is no prior provision, the importer has the
right to choose. Normally, the L/C open bank is the bank that serves the importer, but
in case the seller does not trust this bank, it can be any bank at the request of the
seller.
 Advising Bank letter of credit: Also known as a correspondent bank is required by the
issuing bank to notify the exporter of the opening of the L/C. The L/C notification
bank is usually the correspondent bank of the L/C open bank in the exporter's
country.
 Confirming Bank is the bank that certifies L/C for the L/C open bank at the request of
the L/C open bank.
 A Paying Bank is an L/C open bank, or it may be another bank authorized by the L/C
open bank to take over the payment. If the place of payment is specified in the
exporter's country, the paying bank is usually the L/C notification bank.
- Process:
(1) Contract is signed between buyer and seller, stipulating that payment is to be
made by documentary credit.
(2) Buyer requests a documentary credit be issued. The buyer (applicant) asks his
bank (issuing bank) to issue a documentary credit in favor of the seller
(beneficiary), not requiring confirmation by the seller's bank, and specifying the
documents required to import the goods.
(3) Buyer's bank verifies buyer's creditworthiness. The issuing bank checks the
buyer's creditworthiness and verifies the signatures on the documents to ensure
they are valid, and then makes sure the instructions are clear and complete.
(4) Buyer's bank issues documentary credit. The buyer's bank issues the documentary
credit and forwards it to the seller's bank through the SWIFT network. The buyer
receives a copy of the message.
(5) Seller's bank examines documents. The seller’s bank (advising bank) verifies the
authenticity of the documentary credit and examines the documents to make sure
they follow UCP (Uniform Customs and Practice) rules. It also checks the
instructions to ensure they contain no errors.
(6) Seller is notified. Advising bank informs seller (beneficiary) that it has received a
documentary credit in his favor.
(7) Seller verifies documents. Beneficiary verifies that the terms and conditions
stipulated in the documentary credit match those set out in the sales contract. If
the beneficiary disagrees with any of the terms or conditions, he must ask the
buyer to amend the terms.
(8) Goods are shipped. Seller ships the goods and prepares the documents requested
in the documentary credit instructions.
(9) Seller presents documents to his bank. The seller presents the documents to his
bank.
(10) Seller's bank examines documents. The seller's bank verifies that all
documents comply with the documentary credit terms. Any errors may result in
the seller not being paid.
(11) Seller's bank forwards documents. The seller’s bank forwards the
documents to the buyer's bank with a payment request.
 (12) Buyer's bank examines documents. Buyer's bank in turn verifies the
documents to ensure they comply with the documentary credit terms.
(13) Buyer's bank forwards payment. If the documents comply with the terms,
the buyer's bank forwards payment to the seller’s bank, less applicable fees.
(14) Account is debited and documents delivered. The buyer’s bank debts its
buyer's account for the amount of the documentary credit less applicable fees and
delivers all documents to the Buyer can then clear the goods through customs and
take possession of them.
(15) Seller receives payment. The seller’s bank credits the payment amount to
the seller's account, less applicable fees.
- Types of L/C
+ Revocable letter of credit is an L/C type that the importer can modify, or cancel at any
time without prior notice to the seller. But to amend, or cancel, it must be done before the
exporter delivers the goods and presents the set of documents to the bank for notification.
+ If the letter of credit is type L/C after it has been opened, the L/C open bank may not be
amended, supplemented, or canceled during its validity period, unless agreed upon by the parties
to the L/C.
+ Confirmed irrevocable L/C is an irrevocable L/C type that cannot be canceled by
another bank that guarantees payment at the request of the open bank L/C. The responsibility of
the confirming bank is the same as that of the open bank L/C, so the L/C open bank must pay the
confirmation fee, sometimes even having to deposit up to 100% of the value of L / C at the
confirmation bank (full cash cover).
+ Revolving L/C is a type of L/C that cannot be canceled after use or has expired, it has
the same value, and so on until the total contract value is fulfilled.
+ Back-to-back L/C is a type of letter of credit that is opened based on another L/C
(original L/C). This type of L/C is usually used by exporters to pay suppliers for their goods for
export.
+ Stand by L/C is a type of L/C in which the open bank L/C commits to the importer to
pay them back in case the exporter does not fulfill the delivery obligations set by L/C. Backup
L/C is usually applied in the case of credits that the orderer grants to the producer such as
deposit, advance, L/C opening costs, etc.
+ Reciprocal L/C is a type of L/C that only begins to have an effective value when the
other L/C corresponding to it has opened.
+ (Deferred payment L/C is an irrevocable L/C type in which the bank opens L/C, or the
bank confirms that L/C commits to the beneficiary, to gradually pay the full amount of L/C
within the time limits specified in that L/C.
+ Irrevocable without recourse L/C is a type of L/C that after the exporter has been paid,
the L/C open bank does not have the right to reclaim the exporter's money under any
circumstances. When using this type of L/C, the exporter must write on the bill of exchange the
sentence "exempt from recourse to the signatory" and in the L/C must also write the same.
Recourse exemption L/C is also widely used in international payments.
+ Transferable L/C means an irrevocable L/C, which provides for the right of the paying
bank to pay all or part of the amount of L/C to one, or more persons at the behest of the first
beneficiary. L/C transfers can only be transferred once. Transfer costs are usually borne by the
first beneficiary
- Contents of L/C
+ L/C number, location, and opening date.
 All L/Cs must have their Credit No. for exchanging letters and telegrams related to the
implementation of L/C. L/C numbers are also used to write relevant documents in the
L/C payment document (for example, bills must always include L/C).
 The L/C open location is where the L/C open bank writes a commitment to pay the
exporter. It makes sense to choose the applicable law when a dispute arises if there is a
conflict of law over that L/C.
 Date of issue is the date on which the L/C open bank's commitment to the exporter arises,
the date on which the L/C open bank officially accepts the importer's L/C open
application, the start date for calculating the L/C validity period, and finally the basis for
the exporter to check that the importer is a real importer. whether the opening of L/C is
on time specified in the contract.
+ Names and locations of people involved in the document credit method.
 Traders include importers (L/C beneficiaries) and exporters (L/C beneficiaries).
 Banks participating in the document credit method include L/C open bank, notification
bank, payment bank, and confirmation bank.
+ Amount of L/C
The amount of L/C is both written in letters and numbers and agreed with each other. The
name of the currency should be clear because it is the same name as the dollar, but there are
many different types of dollars in the world: the United States dollar (USD), and the Hong Kong
dollar (HKD). The amount should not be recorded as an absolute number because it is stated that
it is difficult for exporters to deliver goods with the correct value as prescribed by L/C,
especially for bulk items such as coal, rice, and corn ...
+ Validity period, payment term, the delivery term
 The validity period of L/C is the initial period from the date of opening L/C to the
expiration date of L/C. The opening date of L/C must be a reasonable period before the
date of delivery. The expiration date of the L/C must be immediately after the delivery of
the goods for a reasonable period, which must be at least greater than or more than 21
working days.
  Date of payment: It can be either out-of-service or postpaid, depending entirely on the
contract. The payment period may be within the validity period of the L/C (if it is L/C
paid immediately and the exporter presents the document early - at least 5 days before the
expiration date (UCP 600), or 7 days (UCP 500) working), or maybe outside the validity
period.
 Shipment date: set by contract and L/C. If the two parties agree to extend the delivery
period by as many days, the seller must also offer to extend the validity period of L/C.
Conversely, if both parties agree to extend the validity period of L/C. Without
mentioning the extension of the delivery deadline, the seller is forced to deliver on time,
not automatically extending the delivery deadline.
+ Valid expiration location and payment location
Sellers often want the expiry location, and the payment location in their home country,
because they can be completely proactive in presenting payment documents, and the collection is
also done earlier. In contrast, buyers expect L/C's expiry date and payment locations in their
home country because they don't have to pay early.
+ Contents of goods such as Name, quantity, weight, price, quality specifications, packaging,
symbols ...
+ Contents of transportation and freight forwarding such as Delivery conditions (FOB,
CIF ...), place of sending and place of delivery, how to transport and how to deliver goods ...
+ What documents the exporter must present, the number of copies of each type of death
certificate, the requirements for how to sign each type of document
+ L/C open bank payment commitment
Example " We hereby engage with the drawers, endorsers, and bona fide holders of the
draft(s) drawn and presented by the terms of this credit, that the draft(s) shall be fully honored on
presentation" payment/acceptance upon presentation).
+ Other special terms in addition to the above, L/C may also have other contents such as
reference to the legal basis used in payment by L/C.
+ Signature of the open bank L/C.