Payment Methods in Commodity Trade
Choosing the right payment method protects both buyer and seller in international trade transactions.
Letter of Credit (LC)
A bank guarantee that payment will be made once shipping documents are presented. Provides maximum security for both parties but involves higher bank fees and documentation requirements.
Telegraphic Transfer (TT)
Direct bank wire transfer, typically 30% advance and 70% against shipping documents. Faster and cheaper than LC but requires established trust between parties.
Recommendation
- New buyers: Use LC for first transactions
- Established partners: TT offers better efficiency
- Large orders: LC provides additional protection
T&T Services accepts both LC and TT payments. Discuss terms.