Based on the different ways of opening letters of credit, letters of credit can be divided into letters of credit opened by mail, letters of credit opened by telex and letters of credit opened by simple cable.
1) Letter of credit opened by mail
A letter of credit opened by mail means a letter of credit in which the issuing bank opens a valid text of the letter of credit in the form of a written text and sends it to the notifying bank by airmail or express delivery. In the early days, letters of credit were all letters of credit opened by mail. The format of a letter of credit opened by mail is relatively fixed, with a signature sample of the authorized signatory, and is used as the main basis for verifying the authenticity of the letter of credit.
2) Full cable of credit
A letter of credit opened by telex means a letter of credit in which the issuing bank opens a valid text of the letter of credit in the form of an electronic text and transmits it to the notifying bank by telecommunication (telegram, telex or SWIFT system). The authenticity of the letter of credit opened by telex is mainly verified by secret seal.
3) Brief cable of credit
Brief cable of credit refers to the letter of credit in which the issuing bank issues a pre-notification text of the letter of credit (brief cable of credit or pre-notification letter of credit) in the form of a simple electronic text, including the main contents such as the letter of credit number, beneficiary name, amount and validity period, and transmits it to the notifying bank by telecommunication. Subsequently, the notifying bank issues a valid letter of credit (confirmation) in the form of a written text, and sends it to the notifying bank by airmail or express delivery. After receiving the brief cable of credit, the notifying bank shall prepare a brief cable of notice, copy the original text of the telegram, and indicate “this is a brief cable of notice, not for negotiation” when notifying the beneficiary (exporter). In practice, the brief cable of credit can only be used as the basis for the beneficiary to prepare goods, and cannot be used as the basis for shipment and negotiation of delivery of documents. It is necessary to wait until the issuing bank delivers the confirmation before it can be used to ship goods and prepare documents for settlement.