A financial document issued by a bank at the request of the consignee guaranteeing payment to the shipper for cargo if certain terms and conditions are fulfilled. Normally, the letter of credit contains a brief description of the goods, documents required, a shipping date, and an expiration date after which payment will not longer be made.

In international trade, buyers and sellers can not trust each other. The buyer is worried about the seller would not arrange cargo delivery if payment advanced; The seller is also worried about the payment after cargo or submission of shipping documents delivered. Therefore, the two banks as buyers and sellers need a guarantor to pay on behalf of a single payment to bank credit instead of commercial credit. The DOC in such Bank activities is the letter of credit.