Letter of Credit(L/C)is the most generally used method of payment.A letter of credit is a letter written by the importer’s bank to the exporter, verifying the bank’s promise to pay the beneficiary(usually the exporter)upon presentation of documents relating to the dispatch of the goods, if the importer fails to effect payment.Thus it is protective of the exporter’s interests.On the other hand, it protects the importer’s interest too, because the importer receives the guarantee from the bank that the exporter will not be paid until the goods ordered have truly been dispatched and all the documents relating to the goods are in order.The documents mainly include the Contract between the exporter and importer, Bill of Lading, Insurance Policy, Inspection Certificate, etc.

The disadvantage of this method of payment is the cost, which is to be borne by the importer for opening an L/C, that is usually higher than other means of payment, and it takes a longer time.

从类型而言，信用证分为以下几种：

1.跟单信用证（Documentary Credit）

2.光票信用证（Clean Credit）

3.不可撤销信用证（Irrevocable Letter of Credit）

4.保凭信用证（Confirmed Letter of Credit）

5.议付信用证（Negotiation Credit）

6.即期付款信用证和远期付款信用证（Sight/Time Letter of Credit）

7.可转让信用证（Transferable Letter of Credit）

8.循环信用证（Revolving Credit）

9.远期信用证（Usance Credit Payable at Sight）

10.背对背信用证（Back to Back Credit）

11.对开信用证（Reciprocal Credit）

从内容而言，一般包含以下几个方面：

1.The number of the credit and the place and time of its establishment.

2.The type of the credit.

3.The contract on which it is based.

4.The major parties relevant to the credit, such as the applicant, opening bank, beneficiary, advising bank, etc.

5.The amount or value of the credit.

6.The place and date on which the credit expires.

7.The description of the goods including name of commodity, quantity, specifications, packing, unit price, price terms, etc.

8.Transportation clause including the port of shipment, the port of destination, the time of shipment, whether allowing partial shipments or transshipment.

9.Stipulations relating to the draft.

10.Stipulations concerning the shipping documents required.

11.Certain special clauses if any, e.g.restrictions on the carrying vessel and the route.

12.Instructions to the negotiating bank.

13.The seal or signature of the opening bank.

14.Whether the credit follows “the uniform customs and practice for documentary credit”.

Parties involved——

开证人，Applicant for the Credit.Applicant is the party who applies for the opening of a letter of credit.

申请开立信用证的人为开证人，国际贸易中开证人通常为买方（Applicant/Principal/ Accountee/Accreditor/Opener）。信用证中常用的词汇和词组有：

At the request of…　　　　　　　　　　应……的请求(www.daowen.com)

By order of…　　　　　　　　　　　　　按……的指示

For account of…　　　　　　　　　　　由……付款

At the request of and for…　　　　　应……的请求

Account of…　　　　　　　　　　　　　并由……付款

By order of and for account of…　　按……的指示并由……付款

受益人，Beneficiary.Beneficiary is the party in whose favor the letter of credit is issued， and who is entitled to receive the payment， that is， the exporter.

受益人是指信用证中所制定的有权接受货款的人，即出口方。信用证中常见的词汇或词组有：

Beneficiary 　　　　　　　受益人

In favour of…　　　　　　以……为受益人

In your favour…　　　　　以你方为受益人

Transferor…　　　　　　　转让人（可转让信用证的第一受益人）

Transferee…　　　　　　　受让人（可转让信用证的第二受益人）

开证行，Opening Bank/Issuing Bank/Establishing Bank.Opening bank is the bank located in the importer’s country that opens the letter of credit on behalf of the importer.By issuing a credit， the bank assumes full responsibility for payment after the proper draft and documents have been presented.

开证银行是指接受开证申请人的委托开立信用证的进口方所在地的银行。银行开出信用证，就意味着该银行要承担在合适的汇票和单据被出示后付款的责任。

在信用证中常见的词汇和词组有：Opening Bank， Issuing Bank， Establishing Bank

通知行，Advising Bank/Notifying Bank.Advising bank is the bank located in the exporter’s country who informs the exporter that a letter of credit has been opened in his favor and transfers the L/C to the exporter.It is usually the correspondent of the issuing bank.

通知银行是指接受开证行的委托，通知出口方信用证已开出并将信用证转交出口人的银行。该银行通常是开证行的代理行。

议付行，Negotiation Bank/Honoring Bank.Negotiating bank is the bank who buys an exporter’s draft submitted to it under a letter of credit and then forwards the draft and documents to the opening bank for reimbursement.Usually the advising bank is also the negotiation bank.

议付银行指买入出口人交来的跟单汇票并将汇票和单据寄送进口地开证行以索回款项的银行。通常通知行也就是议付行。

付款行，Paying Bank/Drawee Bank.Paying bank is the bank that makes payment to the beneficiary against presentation of stipulated documents.It is usually the opening bank but can also be a third designed bank.

付款行即在所规定的单据被出示时向受益人付款的银行。付款行一般就是开证行，当然也可能是被指定的第三家银行。

偿付行，Reimbursing Bank。它通常为开证行本身，负责代开证行偿还议付行垫款。

保兑行，Confirming Bank。保兑行是对开证行所开立的信用证进行保兑的银行。国际贸易中，通常以通知行作为保兑行。

Flowchart:

1.Apply for establishment（申请开证）

2.Establishing the L/C（开证）

3.Advising the seller and transferring the L/C（通知出口方转递信用证）

4.Draft+Shipping documents（卖方开汇票提交货物单据）

5.To pay the money（议付行垫付货物）

6.Transmission（转递）

7.Reimbursement（偿付）

8.To honour draft on presentation（付款赎单）