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Players in a Letter of Credit

Letters of credit have three main characters, the originator, the beneficiary and the banks. The role of the originator in the creation of the letter of credit is: One, to function as a link that connects the exporter and the importer with the purpose of having a transaction. Two, it functions as a link between the importer and the banks. The importer convenes with the issuing bank to create a letter of credit in order to pay the exporter and which is subject to the terms and conditions of the agreement. A letter of credit must have the participation of at least a financial institution. The banks play a very important role on international trade because not only they give credit to the importers and exporters, but determine whether or not the terms and conditions of the letter of credit have been followed by the exporter and therefore proceed to payment.

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