Letter of Credit Terminology: A Practical A–Z Glossary
Plain-language definitions of the Letter of Credit terms exporters and importers meet most often.
Reviewed by LCCheck team (owner-approved) · 2026-10-12
Short answer
This glossary explains the Letter of Credit terms that appear most often in credits, bank messages and refusal notices, in plain language and with the UCP 600 article where relevant.
| Rulebook | UCP 600 |
|---|---|
| Practice guide | ISBP 821 |
| Message | SWIFT MT700 |
Terms
- Applicant — buyer who asks for the credit.
- Beneficiary — seller entitled to payment.
- Issuing bank — bank that issues the credit.
- Advising bank — bank that passes the credit to the beneficiary.
- Confirming bank — bank adding its own undertaking (Art. 8).
- Nominated bank — bank authorised to pay or negotiate.
- Presentation — delivering documents to the bank.
- Complying presentation — documents meeting the credit, UCP and standard practice (Art. 2).
- Discrepancy — a way documents fail to comply.
- Waiver — applicant's acceptance of discrepancies.
- Amendment — change to the credit, needing beneficiary consent (Art. 10).
- Tolerance — permitted variation in amount or quantity (Art. 30).
- Sight — payment on compliant presentation.
- Deferred payment — payment at a later date.
- Expiry — last date for presentation (field 31D).
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.
Related guides
Check an LC before shipping
Free snapshot in under a minute. No account needed.
Upload your Letter of Credit
PDF · up to 25 MB