Letter of Credit NZ | LC Services from Major Banks

What is a Letter of Credit?

A Letter of Credit (LC) is a financial instrument issued by a bank that guarantees payment to a seller on behalf of a buyer, provided that the seller meets all specified requirements. It's one of the most secure methods of payment in international trade, protecting both importers and exporters.

Types of Letters of Credit Available

Irrevocable LC: Cannot be modified or cancelled without agreement from all parties
Confirmed LC: Additional guarantee from a second bank, typically in the seller's country
Standby LC: Acts as a backup payment method if the buyer fails to fulfill payment obligations
Revolving LC: Automatically renews for multiple shipments over time

Benefits for New Zealand Businesses

✓ Reduced payment risk in international transactions
✓ Build trust with new international trading partners
✓ Comply with international trade regulations
✓ Negotiate better terms with suppliers
✓ Access to trade finance from major NZ banks

How the Process Works

1
Application: Submit your LC requirements through our platform
2
Bank Review: Partner banks review your application and trade details
3
LC Issuance: Upon approval, the bank issues the LC to your supplier
4
Shipment: Supplier ships goods and presents required documents
5
Payment: Bank releases payment upon document verification

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Common LC Terms

Beneficiary: The seller/exporter receiving payment
Applicant: The buyer/importer requesting the LC
Issuing Bank: The buyer's bank issuing the LC
Advising Bank: The seller's bank receiving the LC
UCP 600: Uniform rules governing LCs globally

Frequently Asked Questions

What documents are typically required for an LC?

Common documents include commercial invoice, bill of lading, packing list, certificate of origin, insurance documents, and inspection certificates. Requirements vary based on the specific LC terms.

How much does a Letter of Credit cost in New Zealand?

LC fees typically range from 0.5% to 2% of the transaction value, depending on the bank, your creditworthiness, and the complexity of the transaction. Additional charges may apply for amendments or extensions.

How long does it take to get an LC issued?

With proper documentation, an LC can be issued within 2-5 business days. Complex transactions or first-time applications may take longer.

Can small businesses in NZ access Letters of Credit?

Yes, many New Zealand banks offer LC services to small and medium businesses. Requirements may include business financial statements, trade contracts, and sometimes collateral.

Letter of Credit Services in New Zealand