Types Of Letter Of Credit In International Trade. There are various types of letter of credit (lc) prevails in the trade transactions. In general, people use letters of credit for international trade.
The most common types are: In general, international traders require financial intermediaries such as banks to guarantee payment, and also the delivery of the goods. When an lc is issued on account of international trade, the buyer is known as the importer of goods and the seller is called the exporter of goods.
A letter of credit is a payment method whereby the buyer and seller rely upon the banks to ensure that payment is received and goods are provided.
Letters of credit have become important tools in international trade. Most letters of credit are import/export letters of credit, which, as the name implies, are letters of credit that are used in international trade. When an lc is issued on account of international trade, the buyer is known as the importer of goods and the seller is called the exporter of goods. A letter of credit ( lc ), also known as a documentary credit or bankers commercial credit, or letter of undertaking ( lou ), is a payment mechanism used in international trade to provide an economic guarantee from a creditworthy bank to an exporter of goods.