Confirmed Letter of Credit

Tags: Glossary

A letter of credit that has been confirmed by a bank other than the issuing bank.

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Al Sharqi Shipping is a leader in the logistics industry with more than 30 years of experience in guiding and moving freight across the globe.

What does Confirmed Letter of Credit mean?

A Confirmed Letter of Credit (LC) in shipping is a financial instrument that provides a guarantee of payment from a buyer’s bank to a seller in a transaction. When a seller receives a confirmed LC, they have the assurance that the buyer’s bank will honor the terms of the transaction and make payment for the goods or services provided, even if the buyer is unable or unwilling to make payment. 


The confirmation of the LC means that a second bank, typically located in the seller’s country, has agreed to guarantee the payment of the LC. This gives the seller an additional level of security, as they can rely on the confirmation bank to make payment if the buyer’s bank is unable to do so. 


In the context of shipping, a confirmed LC is often used in international trade transactions, where there may be significant risks associated with doing business across borders. The use of a confirmed LC can help mitigate these risks, providing a reliable and secure method of payment that is trusted by both buyers and sellers. 

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