Letter of Credit for Importers: Key Obligations and Risks
What an importer commits to when it opens a Letter of Credit, and the risks to manage.
Reviewed by LCCheck team (owner-approved) · 2026-10-12
Short answer
For an importer, a Letter of Credit shows the seller that payment is secured, and ensures the bank pays only against the documents the importer specified. In return, the importer must reimburse the issuing bank for a complying presentation — whatever the condition of the goods — and pays issuance fees and often provides collateral or uses a credit line.
| Importer commits to | Reimburse issuing bank |
|---|---|
| Banks check | Documents only, not goods |
| Costs | Issuance fees, credit line or collateral |
Risks
- Goods not as ordered but documents compliant.
- Credit terms that do not protect quality.
- Ties up credit lines.
Reduce them
- Ask for inspection certificates in 46A.
- Specify goods precisely in 45A.
- Use documents that show real shipment (e.g. on-board B/L).
Sources
- ICC — UCP 600 (Uniform Customs and Practice for Documentary Credits)
- US International Trade Administration — Letters of Credit
General guidance, not legal advice. Your bank examines documents independently.
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