Trade · 6 pages · 12 min
A bank promises to pay the seller when the documents match the credit, so the parties need not trust each other.
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A documentary letter of credit is a bank's conditional promise to pay the seller when the seller presents documents that comply with the credit. It substitutes for trust because the seller relies on that bank undertaking, and the buyer relies on the bank to pay only against the papers the buyer required. The opening covers the bank pays on documents, the credit lists the papers, and goods are not what is checked.
The rest of the brief — the later sections and the reading notes — opens after Stripe confirms payment.