1. Letter of Credit L/C
Letter of credit is currently the most commonly used payment method in international trade. Everyone doing foreign trade will be exposed to it sooner or later. A letter of credit is a conditional payment undertaking by the bank. It is a written guarantee document issued by the issuing bank to the beneficiary at the request and instruction of the issuing bank. The issuing bank shall provide the beneficiary within a certain time limit and specified amount. The documents are in accordance with the terms of the letter of credit, and the issuing bank will definitely pay.
2. Wire transfer T/T
Mainly refers to a type of remittance in which the remitting bank should send a telegram/telex or SWIFT to the branch or correspondent bank (ie the remitting bank) in another country upon the request of the remitter. the way. It is settled in foreign exchange cash, and the customer remits the money to the foreign exchange bank account designated by the company, and can request the remittance within a certain period after the arrival of the goods.
3. Document against payment D/P
D/P means that the buyer’s document must be conditioned on the importer’s payment, that is, when the exporter delivers the bill of exchange together with the shipping documents to the bank for collection, the bank instructs the bank to deliver the shipping documents only when the importer has paid for the goods.
Among them, L/C is used the most, T/T is the second, and D/P is less.