Letter of credit is a payment instrument often used in international trade in goods that provides the exporter (seller) with a guarantee of receipt of payment from the importer (buyer) for goods or services supplied. It is a form of payment that is secured by the bank issuing the letter of credit on behalf of the buyer. The mechanism of the letter of credit works in such a way that the buyer's bank undertakes to pay the seller a certain amount on the condition that the seller presents to the bank documents that meet the strict conditions contained in the letter of credit. These conditions may relate, for example, to the quality, quantity, type of goods and the date and method of delivery.
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