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Comparison Table of DCs
Which Documentary Credit is right for you?
In basic terms, a Documentary Credit (DC) is an undertaking by a bank to make a payment provided the terms of the DC are met. There are several types of DC – the main difference is that some are more suited to transactions involving middlemen or traders.
Here's a quick guide to the most common types of DC. If you require assistance in choosing the best payment method, please contact us.
| Documen-tary Credit | Back-to-back DC | Trans- ferable DC | Trans- ferred DC | Standby DC | |
|---|---|---|---|---|---|
| Specific to transactions involving traders | No | Yes | Yes | Yes | No |
| Buyer requires credit facility to issue DC | Yes | Yes* | Yes | No | Yes |
| Degree of freedom to specify terms of DC | High | Medium** | High | Low | High |
| Supplier is guaranteed payment if terms are met | Yes | Yes | Yes | Yes*** | Yes |
| DC issued on a transaction-by- transaction basis | Yes | Yes | Yes | Yes | No |
| Degree of ease for supplier to obtain finance | High | High | High | Medium | High |
*Terms may be better due to support of Master DC
** Some terms to follow Master DC
*** If the terms of the Transferable DC are met
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