What is Letter of Credit (L/C)?
A Letter of Credit is a bank guarantee that ensures the supplier will receive payment as long as the terms and conditions stated in the L/C are met. It provides security for both buyers and suppliers in international trade.
Secure for Buyers
Payment is only released when supplier provides shipping documents matching L/C terms
Guaranteed for Suppliers
Bank guarantees payment as long as documents comply with L/C requirements
Ideal for Large Orders
Best suited for orders above $10,000 USD or new supplier relationships
Step-by-Step Process
Place Your Order
Select products from your supplier and proceed to checkout. Choose "Letter of Credit (L/C)" as your payment method.
Tip: Make sure you have the supplier's complete bank details ready before starting the L/C application.
Apply for L/C at Your Bank
Visit your bank with the Proforma Invoice and supplier's bank details. Your bank will open the L/C in favor of the supplier.
Documents to bring to your bank:
- Proforma Invoice from supplier
- Supplier's bank details (name, address, SWIFT code, account number)
- Your company registration documents
- L/C application form (provided by your bank)
Upload L/C Proof
Once your bank issues the L/C, they will provide you with a confirmation document. Upload this to your order page.
Acceptable documents:
- SWIFT MT700 Copy (Official bank-to-bank message)
- L/C Opening Advice (Bank confirmation letter)
- Stamped L/C Application Form (Bank acknowledgment)
Supplier Verifies L/C
The supplier receives notification from their bank about the L/C. They verify the terms and begin processing your order.
Supplier Ships Goods
Once goods are shipped, the supplier uploads shipping documents (Bill of Lading, Commercial Invoice, Packing List) to the platform.
Bank Releases Payment
The bank reviews the shipping documents. If they match the L/C terms, payment is released to the supplier. You receive the goods.
Typical Timeline
| Stage |
Duration |
Responsible Party |
| L/C Application at Bank |
3-5 business days |
Buyer |
| L/C Issuance & Transmission |
1-2 business days |
Buyer's Bank |
| Supplier Verification |
1-3 business days |
Supplier |
| Production & Shipping |
Varies (per agreement) |
Supplier |
| Document Review & Payment |
5-7 business days |
Banks |
Frequently Asked Questions
How much does it cost to open an L/C?
L/C opening fees vary by bank but typically range from 0.1% to 1.5% of the L/C amount, plus handling fees. Contact your bank for exact charges.
Can I cancel an L/C after opening it?
An L/C can only be cancelled with the mutual agreement of both buyer and supplier. Once issued, it's a binding commitment.
What happens if shipping documents don't match L/C terms?
The bank will reject the documents and withhold payment. The supplier must correct the documents or you can negotiate amendments.
Is L/C suitable for small orders?
L/C is typically used for orders above $10,000 USD due to bank fees. For smaller orders, Bank Transfer (T/T) is more cost-effective.
Who pays the L/C bank fees?
This is negotiable. Common arrangements: Buyer pays all fees, or each party pays their own bank's fees. Clarify this in your Proforma Invoice.
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What is Bank Transfer (T/T)?
Bank Transfer, also known as T/T (Telegraphic Transfer) or Wire Transfer, is the most common and straightforward payment method in international trade. The buyer directly transfers funds from their bank account to the supplier's bank account. It's fast, cost-effective, and ideal for orders of any size.
Fast Processing
Funds typically arrive within 1-3 business days for international transfers
Low Fees
Much cheaper than L/C, typically $20-$50 per transfer regardless of amount
Flexible Amounts
Perfect for small to medium orders, from $500 to $100,000+
Common Payment Terms
In B2B trade, bank transfers are usually split into stages to protect both buyer and supplier. Here are the most common arrangements:
1
50% Advance / 50% Before Shipment
Most common for new supplier relationships
- Pay 50% deposit to start production
- Supplier completes production
- Pay remaining 50% before goods ship
2
50% Advance / 50% Against Documents
Balanced approach for medium orders
- Pay 50% deposit to start production
- Supplier ships goods
- Pay remaining 50% after receiving shipping documents
For small orders or trusted suppliers
- Pay full amount upfront
- Supplier produces and ships
- Fastest processing, best discounts
4
50% Advance / 50% After BL(Bill of Landing) Copy
For established buyer-supplier relationships
- Pay 50% deposit to start production
- Supplier ships and sends Bill of Lading copy
- Pay 50% after seeing BL copy
Tip: The payment terms will be clearly stated in your Proforma Invoice. Always confirm the terms with your supplier before making any payment.
Step-by-Step Process
Place Your Order
Select products and proceed to checkout. Choose "Bank Transfer (T/T)" as your payment method.
After placing your order, you'll receive a Proforma Invoice with the supplier's complete bank details.
Review Supplier's Bank Details
Check your order details page for the supplier's banking information. You'll need:
Required information:
- Beneficiary Name: Supplier's company name (exact match required)
- Bank Name: Supplier's bank
- Account Number: Supplier's bank account
- SWIFT/BIC Code: International bank identifier
- Bank Address: Branch location
Visit Your Bank or Use Online Banking
Initiate an international wire transfer from your bank account to one of our designated accounts below.
Important details to include:
- Reference/Description: Include your Order Number (e.g., "Payment for ORD-ABC123")
- Amount: Exact amount in the currency specified (USD)
- Charges: Choose "SHA" (shared) or "OUR" (you pay all fees) for faster processing
Upload Payment Proof
After completing the transfer, your bank will provide a receipt or confirmation. Upload this to your order page.
Acceptable proof documents:
- Bank Transfer Receipt (screenshot or photo)
- SWIFT MT103 Copy (official bank confirmation)
- Online Banking Confirmation (PDF export)
Supplier Confirms Receipt
The supplier checks their bank account. Once funds arrive (usually 1-3 business days), they confirm receipt and begin processing your order.
Order Processing & Shipping
The supplier manufactures (if needed) and ships your goods. You can track the order status in your "My Orders" page.
Typical Timeline
| Stage |
Duration |
Notes |
| Initiate Bank Transfer |
Same day |
Before bank cutoff time (usually 2-3 PM) |
| International Transfer Processing |
1-3 business days |
Depends on banks and countries involved |
| Supplier Receives Funds |
1-2 business days |
After funds arrive in supplier's country |
| Supplier Confirms & Starts Production |
1-2 business days |
Supplier verifies payment and begins work |
| Production & Shipping |
Varies |
Per agreement (typically 15-45 days) |
Security Tips
Always Verify Bank Details
Double-check the supplier's bank details match exactly what's in the Proforma Invoice
Include Order Number
Always put your order number in the transfer reference for easy tracking
Use Verified Suppliers Only
Only transfer to suppliers verified by TokoBR.com to avoid fraud
Keep All Receipts
Save all bank transfer receipts and upload them to your order page immediately
Never Pay to Personal Accounts
Only transfer to the company name listed in the Proforma Invoice, never to personal accounts
Beware of Last-Minute Changes
If supplier asks to change bank details after order placement, verify through official channels
Frequently Asked Questions
How much are the bank transfer fees?
International wire transfer fees vary by bank but typically range from $20-$50 USD per transfer, regardless of the amount. Some banks charge a percentage (0.1%-0.5%) for very large amounts. Contact your bank for exact fees.
How long does an international bank transfer take?
Most international transfers take 1-3 business days. Transfers within the same region (e.g., SEPA in Europe) can be same-day. Transfers to remote countries may take up to 5 business days.
What currency should I use for the transfer?
Use the currency specified in your Proforma Invoice (usually USD, EUR, or the supplier's local currency). Your bank will automatically convert from your local currency at the current exchange rate.
What if I send money to the wrong account?
Contact your bank immediately. Recovery is possible but difficult and may take weeks. This is why it's crucial to verify bank details before sending. Always use verified suppliers on TokoBR.com.
Is bank transfer safe for large orders?
Bank transfer is safe when used with verified suppliers and proper payment terms (e.g., 30% advance, 70% before shipment). For very large orders ($50,000+), consider using Letter of Credit (L/C) for additional protection.
Can I get a refund if the supplier doesn't deliver?
Bank transfers are difficult to reverse once completed. This is why we recommend using split payment terms and only working with verified suppliers. If issues arise, contact TokoBR support immediately for mediation.
What is SWIFT code and why do I need it?
SWIFT code (also called BIC) is an 8-11 character code that identifies the supplier's bank internationally. It's required for all international wire transfers to ensure the money reaches the correct bank.
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