Confirmed vs Unconfirmed Letter of Credit: Which Risk Changes?
How confirmation of a Letter of Credit changes the exporter's risk, and when it is worth paying for.
Reviewed by LCCheck team (owner-approved) · 2026-10-12
Short answer
A confirmed Letter of Credit carries a second bank's undertaking, usually in the exporter's country, in addition to the issuing bank's (UCP 600 Art. 8). Confirmation protects against the issuing bank or its country failing to pay; it does not protect against discrepant documents. An unconfirmed credit relies on the issuing bank alone.
| Rule | UCP 600 Art. 8 |
|---|---|
| Protects against | Issuing bank and country risk |
| Does not protect against | Discrepant documents |
| MT700 | Field 49 Confirmation Instructions |
When confirmation helps
- Issuing bank is unknown or weak.
- Country has transfer or political risk.
- Large credit relative to your business.
Check
- Field 49: CONFIRM, MAY ADD or WITHOUT.
- Who pays the confirmation fee.
- Confirming bank's own document requirements.
Sources
- ICC — UCP 600 (Uniform Customs and Practice for Documentary Credits)
- Swift — MT700 Issue of a Documentary Credit (category 7 standards)
General guidance, not legal advice. Your bank examines documents independently.
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