Documentary Credit(Letter of credit) – Payment Under International Trade

Documentary credit is the most used means of payment in international transactions(trade); it implies for the exporter a greater level of security in the collection of his sales. Being a given order by the importer to the issuing bank, which executes the payment against the documents required within the credit´s terms and conditions. Again a documentary credit is an undertaking given by a bank (issuing bank) of a stated amount to the seller (beneficiary) on the instruction of the buyer (applicant) to pay at sight or to a future date.