A simple way to understand a Letter of Credit and avoid payment rejection.
A SWIFT MT700 is the official banking message used to issue a Letter of Credit (LC).
It defines the rules, amounts, dates, documents, and conditions that the seller must respect to receive payment.
If just one document is incorrect, the bank can legally refuse payment—even if the goods are perfect.
This guide explains each field in clear business language.
✅ What MT700 Is Used For
The buyer’s bank guarantees payment
Payment is made only if documents comply
Every field protects the buyer and supplier
For the seller, reading MT700 correctly = guaranteed payment
✅ Key MT700 Fields (Plain English Explanation)
| SWIFT Field | Meaning | What to Check |
|---|---|---|
| :40A – Form of Credit | Almost always “IRREVOCABLE” | Never accept “REVOCABLE” |
| :20 – LC Reference Number | Identification of the credit | Must appear on all correspondence |
| :31C – Date of Issue | LC becomes legally valid | Check deadlines |
| :31D – Expiry Date & Place | Last day + country for document presentation | Expiry in seller’s country = easier |
| :50 – Applicant | Buyer / Importer | Name must match contract |
| :59 – Beneficiary | Seller / Exporter | No spelling errors |
| :32B – Currency & Amount | Maximum LC value | Must match invoice/contract |
| :39A – Tolerance | Example ±10% allowed | Important for bulk cargo/freight |
| :41A – Payment/Nego Bank | Bank that pays or negotiates documents | Ensure this bank accepts your docs |
| :42C – Payment Terms | At sight or 30/60/90 days (usance) | Impacts cash flow |
| :43P – Partial Shipments | Allowed / Not Allowed | If NOT allowed = only one shipment |
| :44C – Latest Shipment Date | Final date cargo must leave port | Miss it → payment refused |
| :44E / 44F – Ports | Loading port / Discharge port | Must match Bill of Lading |
| :45A – Goods Description | Product, quantity, Incoterm | Too detailed = dangerous |
| :46A – Required Documents | Invoice, BL, COO, Insurance, SGS, etc. | Every word matters |
| :47A – Additional Conditions | Extra requirements | Watch out for “soft clauses” |
| :71B – Charges | OUR / SHA / BEN | OUR = you pay all bank fees |
| :49 – Confirmation | Confirmed / Without | “Confirmed” = stronger protection |
✅ Example of a Simple Real MT700 (Plain English Version)
Irrevocable Letter of Credit
Amount: USD 100,000
Payment: At sight (immediate payment)
Partial Shipments: Allowed
Documents: Invoice, Original B/L, Certificate of Origin, Insurance 110% of CIF
Expiry: 21 days after shipment
✅ If documents match → payment is guaranteed
✅ Most Common Risks & How to Avoid Them
❌ Wrong shipment dates
❌ Ports not matching the Bill of Lading
❌ Overly detailed product description
❌ No tolerance on bulk cargo
❌ “Subject to applicant approval” (dangerous soft clause)
❌ Expiry in buyer’s country, not seller’s
❌ Unknown who pays banking fees
Small detail = big financial risk.
✅ 10-Point Checklist Before Shipping
✔ Shipment date is realistic
✔ Partial shipments allowed (if needed)
✔ Tolerance (±10%) included
✔ Accurate ports of loading/discharge
✔ Required documents easy to produce
✔ Payment at sight or clear usance terms
✔ Bank of negotiation is acceptable
✔ Confirmation needed or not
✔ Expiry date in seller’s country
✔ No soft clauses
If something is incorrect → request an Amendment (MT707) before shipping.
✅ Quick FAQ
Q: Does the bank check the goods?
No — banks check documents only, not the cargo.
Q: What happens if one document is wrong?
Payment can be refused.
Q: Can an MT700 be fixed after issue?
Yes — through an amendment.
Q: Does MT700 prove the buyer has money?
Yes — the buyer’s bank commits to pay if documents comply.
✅ Final Takeaway
Reading a SWIFT MT700 correctly means:
✅ Zero risk of non-payment
✅ No disputes
✅ Faster logistics
✅ Total control of the LC process
A properly drafted MT700 transforms a Letter of Credit into a guaranteed payment, based only on documents—not negotiation, not trust, not promises.
