First of all, the foreign trade industry is called T/T, there are many European and American customers called wiretransfer。Because in the field of trade, in order to avoid cash transactions and even illegal money laundering, remittance is relatively convenient and is the mainstream international payment method。Simply put, "transfer."。
Once again, the collection is D/P in English, which is called document marking。In the collection operation, the supplier submits the documents and relevant information to the bank, and the bank pays the supplier。Among them, the bank does not provide guarantees and endorsements, and the final payment is actually the customer。Only in this way can the customer pay for the goods directly, rather than the customer paying the bank, the bank pays the supplier, and then the customer takes the bill of lading and other documents to collect the goods。
Take a final lookLetter of creditL/C, full name LetterofCredit。In theory, this is actually very close to D/P, the difference being that there are multiple written materials, also known as letters of credit。The supplier submits the corresponding documents to the designated bank with the letter of credit, and then receives the payment, which is a simple letter of credit。
But different from D/P, the letter of credit is a bank credit, that is, the bank will endorse the letter of credit。If there are no particularly serious problems with the documents specified in the credit, the supplier has no reason to refuse payment, but must provide the documents required by the credit。Therefore, we also call letters of credit "documentary transactions".，Because most of the time，Bank credit，Always higher than some businesses，That's why，Some international orders，Or certain professional customer orders，More inclined to use letter of credit operation，To maximize the protection of the interests of both parties，Because the bank role is caught in the middle。
Why bother with D/P and L/C when T/T is so convenient？In fact, it's about security。
If you are a customer, your order amount is 100w, you have found a new supplier, so, T/T will make you feel uneasy？Please pay 30% deposit according to the international practice, and then look at the copy of the bill of lading for the remaining 70%. Can you agree？Aren't you afraid that a vendor you look for online, never met, just gives you a 30w deposit and disappears？
On the other hand, if your advance payment is small, or no deposit, then the supplier will agree？If you only pay 5% deposit, the supplier to complete this order, the possible materials and various costs to pay hundreds of thousands of dollars in advance。At that time, you may casually say, cancel the order, what will the other party do？So you want to pay a smaller deposit, even the supplier did not agree。
Therefore, due to the consideration of risk factors in this international trade, T/T, although convenient, although commonly used, is not absolutely without problems。Because of this, D/P and L/C are still widespread。