The main methods which have been adopted for making international payments through the banking system are as follow:
1. Bill of exchange:
It is used for making international payments for the purchase of goods, services and capital transactions. The creditor can draw the bill of exchange on debtor or on his bank under the terms of L.C.
2. Bank draft:
The debtor can make the foreign payment by purchasing a bank draft from the bank. The draft is dispatched by the debtor to the creditor. He can claim the amount of draft from the correspondent bank.
3. Cheques:
The debtor can draw a cheque on his bank. The cheque is send to the creditor. The creditors deposit the cheques in his account. The creditor’s bank collects the amount of the cheques from the debtor bank. This method is used between the friendly countries.
4. Credit cards:
The debtor makes the payment to his bank, the bank issues a credit card. The debtor keeps the card with himself. When he visits to foreign countries, he can get foreign currently against this card. The debtor makes the payment personally to the creditor.
5. Letter of credit:
The importer opens an account with his bank in favors of exporter. The amount is paid in the bank. The bank issues a L.C. this L.C send to the exporter’s bank for making payment on amount of goods imported.
6. Traveler’s cheques:
Traveler’s cheque is an order drawn by a bank upon a self to pay a specified amount of money on demand to the purchaser of traveler cheque. The paying bank after comparing the signatures of the purchaser of a cheque, and makes the payment.
7. Telegraphic transfer:
The debtor makes the payment to the banker. The banker sends a telegraphic massage to his correspondent’s bank to make the payment. The bank can send the massage by cable to overseas countries. His method is the quickest method of payment.
1 comments:
Write commentsVery informative post on the various methods used for international payments! It's great to see how different banking instruments like bank drafts and credit cards facilitate global trade and transactions. Speaking of international financial dealings, I'd like to highlight the importance of LEI registration in the context of these transactions. The Legal Entity Identifier (LEI) is crucial for enhancing the transparency and reliability of financial transactions worldwide. Ensuring that each legal entity involved in financial transactions is registered with an LEI can greatly simplify and secure international payment processes. It's interesting to think about how the integration of LEI registration can further streamline these methods, especially in transactions involving significant amounts and across multiple jurisdictions.
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