Wire transfers involve directly transferring funds from a buyer's bank account to a seller's account. They are the simplest form of international payment but have low reliability without trust between parties. Bank guarantees involve a bank undertaking to pay the seller even if the buyer fails, upon confirmation of fulfilled obligations. Letters of credit involve a bank promising to pay the seller upon presentation of compliant documents, ensuring payment for the seller and goods receipt for the buyer. Pricing ranges from 0.25% for wire transfers and bank guarantees to up to 2% for letters of credit, which have higher fees for issuance, confirmation, document checking and reimbursement processing. The document requests any questions or comments about international payment methods.

1. TYPES OF
INT'L PAYMENTS

2. Contents
●Wire transfer, its pros & cons
●Bank guarantee – when can we use that
●Letter of Credit – contemporary
instrument of global trade
●Pricing
●? ? ?

3. So, No.1 – WIRE TRANSFER
●Transfer of funds from buyer’s bank account to
an account of seller
●Made either (i) before shipment or (ii) after
shipment
●Direct, but level of reliability is low
●By fact, the simplest form of settlements
between trading parties, if there is a trust
●Pricing… - we will talk about it later

4. HOW WIRE WORKS
1. Money
sent
2. Goods shipped
(hopefully)
Buyer Seller

5. OR, OTHER WAY …
1.Goods shipped
(risk, isn’t it?)
2. Buyer pays $
Buyer Seller

6. Next, BANK GUARANTEE
●Buyer’s bank undertaking that they will pay,
even if their customer fails, upon the condition
that the seller / supplier confirms the fulfilment
of its obligations. This guarantee is referred to
as payment guarantee
or
●Supplier’s bank’s guarantee, promising to
return the advance payment if the supplier fails
to ship the goods / provide services – advance
payment guarantee

7. WOW, LETTERS OF CREDIT!!!
●The Banking instrument whereby bank
promises to pay to supplier upon presentation
of LC required and compliant documents only,
thus insuring both supplier (who will receive
money whatever happens to buyer…, or his
intentions) and buyer (only the compliant
documents will be honoured)
●the bank is very important here, therefore,
parties usually choose the first-rate European
bank to process the payment

8. HOW…
Buyer’s (Issuing)
BankSeller’s Bank
Seller Buyer
1) Contract
2b) Letter of credit
3a)
Shipment
3b)
Documents
4) Payment
2a) LC
request

9. And finally, smth abt PRICES
Lets do it starting from lowest, and moving to the
most expensive
1.Wire transfers - usually, up to 0.25% of the
amount of transfer
2.Bank guarantee – also 0.25%, but do not
forget, that the company will then have to pay
for transfer too.
3.Letter of credit – the price may get up to 2% of
the transaction amount (it includes fee for
issuance; confirmation, if any; documents
check; reimbursements; & etc.)

10. Oh, how could I forget
●Questions ???
●Your critics and comments