A Counter Letter of CreditIt offers an additional layer of security and assurance to the beneficiary by providing a secondary payment guarantee, thereby reducing credit risk and enhancing trust in the transaction.
As a matter of fact, the purpose of a Counter Letter of Credit (Counter L/C) is to provide an alternative payment method and enhance financial security for the parties involved in international trade transactions, particularly when dealing with unfamiliar or high-risk counterparties. A Counter L/C serves as a secondary or “counter” instrument to the primary Letter of Credit (L/C) issued by the buyer’s bank (issuing bank) in favor of the seller (beneficiary).