The standby letter of credit (or contingent credit) does not constitute a means of payment per se but functions more as a guarantee against the possible non-payment of an importer. Visit here: https://bit.ly/3NRONP3

3. Standby letter of credit is a very reliable means of
payment for activities related to foreign trade, and
is used to guarantee different kinds of obligations,
in which if the applicant does not comply with the
commitments made, the bank guarantees
payment.
International Trade is an activity in which the way
of payment and collection of international sales,
exports and imports are of vital importance, with
the addition that given the complexity of the
operations carried out, choosing the most efficient
form of payment, that is, the one that allows
obtaining the maximum security of collection at

5. Therefore, in international trade, a wide
variety of means or tools have been
created that ensure payment to the seller,
the letter of credit is one of those options.
The SBLC lease is a document issued by
a bank (issuer) by order and express
request of a client (orderer/importer), by
which it authorizes the beneficiary
(exporter) to issue a bill of exchange
against the said bank or against another
entity designated in the letter itself,
committing to pay it, provided it is issued

7. The standby letter of credit (or contingent credit)
does not constitute a means of payment per se but
functions more as a guarantee against the possible
non-payment of an importer. The SBLC works as a
guarantee presented by the importer’s bank that
protects the exporter from possible non-payment of
the merchandise that is the object of the sale.
The International Chamber of Commerce (ICC)
regulates the SBLC lease in two of its publications:
UCP 600 in general and, more specifically, UCP 590
“International Stand by Practices”.
The great operative difference between the letter of
credit and the normal letters of credit is that in the
normal letter of credit the documentation must be

9. The main advantages of the standby
letter of credit compared to normal
letters of credit
The standby letter of credit is less
operationally complex for the exporter
than the normal letters of credit since the
exporter only has to present the
documentation required in the letters of
credit in the event of default by the buyer.

11. In relation to ordinary guarantees, there is an
absolute separation between them and the
commercial operation they cover. Thus, while a
commercial dispute over the compliance or
non-compliance of any of the parties may
contaminate the guarantee represented by the
ordinary guarantees, the letter of credit is not
affected in any way, and in the event of non-
payment, the exporter presents the stipulated
documents to the bank and the bank (if the
documents are formally compliant) must pay.
The standby letter of credit is issued under the
international CCI regulation, while the ordinary
guarantees are subject to the legislation of the