Opening Charges

Opening Charges refer to the handling fee charged by the issuing bank when the importer (buyer) applies to the bank for the issuance of a letter of credit. This fee is usually calculated as a certain percentage of the letter of credit amount (e.g., 0.1%-0.5%), and a minimum charge is set. Usage scenario: Under the letter of credit settlement method, the buyer needs to pay the opening charges to the issuing bank. This fee is generally borne by the buyer, but it can also be agreed in the contract that the seller bears it. Notes: Opening charges are different from amendment fees, negotiation fees, confirmation fees, etc.; if the letter of credit terms are complex or the amount is huge, the opening charges may be higher; the buyer should confirm the rate before opening the letter of credit to avoid affecting the progress of opening the letter of credit due to fee disputes. Difference from other terms: Opening charges are collected by the issuing bank, while notification fees and negotiation fees are collected by other banks; opening charges are usually collected in a lump sum, while amendment fees are collected each time an amendment is made. Foreign trade practitioners should clarify the party bearing the costs and consider this cost when quoting.