Global Payment Methods for International Exporting

For companies interested in starting international exporting, there are a variety of ways for collecting global payments from an international customer. While advanced payments are ideal, they may not always be viable in an international market, especially when you don’t have a previous business relationship with a customer. While credit cards are also used in the international market, they are typically reserved for smaller purchases, not massive export orders. Here are four of the most common global payment methods for large transactions.


Letter of Credit (LOC) - The most widely used and recommended method of payment is a letter of credit, which provides security for both the buyer and the seller. The buyer contacts their bank and requests a letter of credit, which is sent directly to the seller’s bank. Once the seller is notified that the letter of credit has been received, they will send the items purchased directly to the address provided by the buyer. The seller’s bank sends the shipping documents to the buyer’s bank and the buyer makes payments directly to their bank, which is transferred to the seller’s bank.


Open Account - The open account payment method allows the buyer to pay only after they have received the goods. While the method is recommended only if they buyer is extremely trustworthy since payment is rendered after the goods have been received, it is actually quite common when the buyer is a large, well-established corporation and has a concrete international business history. Using an open account is not recommended for businesses just starting out since they will be left without compensation if the buyer defaults on their payments.

Document Against Payment - Still considered a “risky” method of payment but safer than an open account, this method refers to when the goods are shipped by the seller but the buyer cannot take possession of the goods until they have agreed to their financial obligation of paying the seller. Collecting documents used in this type of transaction include a “document on acceptance” when the buyer accepts the agreement in order to have the goods released and “document on payment” when the buyer accepts responsibility for payment.