International Payment Methods: Cheques, Transfers, and Credits

International Payment Methods

Available options include: Cheque, Bank Transfer, International Remittance, and International Documentary Credit.

1. The Bank Cheque: Concept and Economic Function

The cheque serves as a mandate for payment. It is payable on demand and acts as a non-credit means of payment that prevents the immediate release of cash into the market. The issuing institution must be a credit institution where funds are held.

Cheque Classifications

• Nominative Cheque: Payment mandate in favor of a specific person.
• Bearer Cheque: Payable to the bearer at the time of filing.

Key Terminology

• LDOR (Drawer): The originator of the payment and holder of the funds.
• LDO (Drawee): The financial institution holding the drawer's funds.

Advantages and Disadvantages

• For the Seller/Exporter: The deposit is guaranteed by the bank (safer than a personal cheque), though they must remain cautious regarding country risk.
• For the Buyer/Importer: Allows payment after receiving goods. If goods are unsatisfactory, the buyer may request a reimbursement from the bank.

2. Legal Status of International Transfers

2.1. The Rome Convention

The transfer is a set of representative events where the characteristic performance is the mandate to execute payment to the beneficiary. In the absence of an express choice by the parties, the law of the payer's bank country applies.

2.2. UNCITRAL Model Law

Refers to the UNCITRAL Model Law on International Credit Transfers, adopted on May 15, 1992.

2.3. Directive 97/5/EC

European Parliament and Council Directive of January 27, 1997, regarding cross-border transfers. Transposed in Spain via Law 9/1999 of April 12.

3. Documentary Credit

3.1. Concept and Economic Function

Documentary credit addresses mistrust between parties caused by distance and lack of solvency. It resolves the conflict where the buyer refuses to pay until goods are received, and the seller refuses to ship until payment is secured.

Definition: An operation by which the issuing bank, on behalf of the payer, assumes a payment obligation to a beneficiary against the delivery of specific documents.