Available By – Letter of Credit Consultancy Services

What is the Meaning of by Payment?

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At sight payment is a payment due on demand.

At sight letter of credit can be defined as a letter of credit that is payable as soon as the complying documents have been presented to the issuing bank or the confirming bank.

Some credit do not mention at sight term, instead issued available by payment.

Is “by payment” the same as “at sight payment” in a letter of credit transaction?

What happens if the letter of credit does not mention at sight but states only by payment?

When should the issuing bank pay to the exporter if credit available by payment?

How long should an exporter wait for the payment when credit states that the payment terms is by payment only?

Let me try to answer all of these questions via case study.

Case Study: What is the Meaning of by Payment?

Dear Sir,
I find your website very useful. I think you have published more than 300 articles and they are very helpful to me. I am working as an export manager in an international steel manufacturing firm in India.
I would like to ask you a question regarding letter of credit payment terms.
A while ago I have received an irrevocable letter of credit, but in the letter of credit there is no specific payment date and also the credit does not mention a sight draft. In the letter of credit issuing bank only put below statement in “Field 41D : Available with… by..” section.
” :41D/AVAILABLE WITH … BY … : ANY BANK IN INDIA
BY PAYMENT “
What I would like to learn is that if the meaning of “BY PAYMENT” and “AT SIGHT” is the same or not?
Some of my friends here suggested that we should amend the “by payment” statement with “at sight”. Is he correct?
Regards
Durai Raj
Answer:
Dear Duraj thanks for your question. Actually “by payment” and “at sight” have the same meaning in letters of credit. Swift rule book states that “When code contains BY PAYMENT, this should be understood to mean payment at sight.”
Issuing banks have 5 banking days to check your documents after day have received your presentation. If they find your presentation complying, then they have to pay the letter of credit amount to you without losing time under at sight letters of credit.
If I were you I would not count too much on confirming banks when a letter of credit is available with at sight payment. In most cases confirming banks do not pay your money until they have been reimbursed by the issuing banks.

Availability of Letters of Credit

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payment types in a letter of credit transaction

Updated on:

15 February 2025

Letters of Credit are flexible instruments because they incorporate various payment options.

According to letter of credit rules, a credit must state whether it is available by sight payment, deferred payment, acceptance or negotiation. (UCP 600 – Article 6- b)

The credit must explicitly indicate its availability as: (i) immediate payment (sight), (ii) payment at a future determinable date (deferred), (iii) acceptance of a time draft drawn on the issuing, nominated bank, or confirming bank, or (iv) negotiation with or without recourse to the beneficiary.

Sight payment ensuring prompt payment upon document compliance. Deferred payment, allowing for payment at a future date. Acceptance LCs involve the bank’s commitment to pay at a later date via draft acceptance. Negotiation LCs offer the possibility of receiving early payment by discounting drafts.