Based on whether it is confirmed by another bank
1) Confirmed L/C
A confirmed L/C is a L/C issued by an issuing bank, where another bank guarantees to pay for documents that meet the terms of the L/C. The bank that confirms the L/C is called a confirming bank.
2) Unconfirmed L/C
An unconfirmed L/C is a L/C issued by an issuing bank that is not confirmed by another bank.
Based on the payment time
1) Sight L/C
A sight L/C is a L/C that the issuing bank or the paying bank will immediately pay after receiving a documentary bill or shipping document that meets the terms of the L/C.
2) Usance L/C
A usance L/C is a L/C that the issuing bank or the paying bank will pay within the specified period after receiving the documents of the L/C.
3) Usance credit payable at sight
A usance letter of credit is a letter of credit that stipulates that the beneficiary opens a usance bill, the paying bank is responsible for discounting, and all interests and fees are borne by the issuer. For the beneficiary, this letter of credit is actually still a sight payment, and there is a “usance L/C payable at sight” clause in the letter of credit.
The standard is whether the beneficiary’s rights to the letter of credit can be transferred
1) Transferable letter of credit
A transferable letter of credit means that the beneficiary (first beneficiary) of the letter of credit can request the bank that authorizes payment, assumes the responsibility of deferred payment, accepts or negotiates (collectively referred to as the “transfer bank”), or when the letter of credit is freely negotiable, the transfer bank specially authorized in the letter of credit can be requested to transfer all or part of the letter of credit to one or more beneficiaries (second beneficiaries) for use. The issuing bank must clearly indicate “transferable” in the letter of credit, and it can only be transferred once.
2) Non-transferable letter of credit
A non-transferable letter of credit is a letter of credit in which the beneficiary cannot transfer the rights of the letter of credit to others. If the letter of credit does not indicate “transferable”, it is a non-transferable letter of credit.