The letter of credit mechanism has been around for a few hundred years and is widely accepted as a standard, proven and widely used system world wide for buyers and sellers.

However, under the current manual system, a lot of time and manpower is needed to process a whole range of documents, like invoice, bill of lading etc.

In addition, these documents are duplicated several times and handed out to all parties involved in the transaction.

Understanding Electronic Letters of Credit

What is electronic letter of credit?
Electronic letter of credit is a letter of credit transaction which is carried by electronic means of communication and issued according to the rules such as eUCP allowing electronic presentations.

The matching process between letters of credit (LCs) and corresponding documents, such as bills of lading and insurance cover notes can be carried out faster with v-Eyeballing (online) reducing the processing time and cost.

The new technology is able to perform about 95 to 98 per cent of the matching, the rest being subjective contents for manual viewing.

A normal LC transaction fee can cost up-to US$80, but with "Electronic Letters of Credit" the cost are as low as between US$8 to US$20 per transaction.

Usually, it takes between one and four hours to compare original documents, but with "Electronic Letters of Credit" technology, it can process and tracked in "Real Time" that allows logistics and insurance agency to submit documents electronically.