How Payment by Documentary Credit in International Commerce Works?

Documentary Credit (also known as  letter of credit  or bankers commercial credit, or letter of undertaking) is one of the payment instruments that institutions providing non-cash payment services (banks, foreign bank branches, etc.) deal with to make a valid payment transaction at the request of the account holder. Documentary credit is the most commonly used for payment of international sales of goods. The supply of international payment services by institutions providing non-cash payment services shall be conducted in accordance with regula…