Transferable L/C

A transferable letter of credit refers to a letter of credit under which the beneficiary (the first beneficiary) may request the authorized bank (the transferring bank) to transfer all or part of the amount of the letter of credit to one or more second beneficiaries (actual suppliers). Common use scenarios include intermediary trade: the intermediary, as the first beneficiary, transfers the letter of credit to the actual manufacturer in order to avoid disclosing the final buyer's information or to earn the price difference. Points to note: 1. The letter of credit must expressly state "Transferable"; otherwise, it is not transferable; 2. Transfer may be made only once, and the second beneficiary may not transfer it again; 3. The transferring bank may be the issuing bank, the confirming bank, or a nominated bank; 4. The first beneficiary has the right to substitute invoices and drafts in order to earn the price difference, but this must be clearly stated in the transfer application; 5. A transferable letter of credit differs from a back-to-back letter of credit: the former is based on the same letter of credit, while the latter is an independent new letter of credit; it also differs from a divisible L/C, which has now been incorporated into the category of transferable letters of credit. In addition, transfer fees are usually borne by the first beneficiary, and the risks faced by the second beneficiary are related to the credit of the first beneficiary.