SWIFT / cross-border

Letter of credit settlement

A cross-border trade payment under a documentary letter of credit: the issuing bank promises to pay against compliant documents, the presentation is examined, and on compliance the payment leg settles between the banks and the exporter is credited.

Contributor Shubham Mathure19 July 2026

PAYMENTS SIGNAL · REFERENCE CARD

Actors

Demo Trading Ltd (importer)customer
Bank Alfa (issuing bank)bank
Meridian Bank (advising / nominated)bank
Example Supplies Ltd (exporter)customer

Messages

LC application
MT700
Advise credit
Present documents
Documents forwarded
MT754

The sequence

#	Step	Route	Kind
1	LC application — The importer asks Bank Alfa to issue a credit	Importer → Bank Alfa	message
2	MT700 — Bank Alfa issues the credit to Meridian	Bank Alfa → Meridian	message
3	Advise credit — Meridian advises the exporter	Meridian → Exporter	message
4	Present documents — The exporter ships and presents documents	Exporter → Meridian	message
5	Documents forwarded — Meridian checks and forwards the documents to Bank Alfa	Meridian → Bank Alfa	message
6	Examine presentation — Bank Alfa examines the documents	Bank Alfa	internal
7	MT754 — Bank Alfa authorises payment on a compliant presentation	Bank Alfa → Meridian	message
8	Settlement — The payment leg settles between the banks	Bank Alfa → Meridian	settlement
9	CR exporter — Meridian credits the exporter	Meridian	posting

Exception rails

Rail	Trigger	Where the money ends up	Next action
Discrepant documents	Bank Alfa finds the presented documents do not comply on their face with the credit.	No payment has been made to the exporter; the money stays with the importer's side while the discrepancies are unresolved. · No interbank settlement occurred — the payment obligation never crystallised because the presentation was non-compliant.	Bank Alfa — The exporter corrects and re-presents the documents, or the importer waives the discrepancies so Bank Alfa can authorise payment.