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Letter of Credit

Understanding Letters of Credit (LC) in International Trade

A letter of credit (LC) is a financial document used in international trade to facilitate secure transactions between a buyer and a seller. Acting as a guarantee from a bank, the LC ensures that the seller will receive payment once they fulfill specified conditions, typically by providing the required documents or meeting certain shipment terms. The letter of credit minimizes risk for both parties, as the seller is assured of payment upon compliance with agreed-upon terms, while the buyer gains confidenc