Free Online Course in International BusinessMoney OrdersA money order is a financial instrument issued by a bank or other institution allowing the individual named on the order to receive a specified amount of cash on demand. It is often used by people who do not have checking accounts. It is a limited tool since it can be used only for certain currencies in certain amounts.Cash or Bank NotesThe exchange of bank notes or cash is seldom used in international transaction because of the risk of loss or forgery.Credit CardsWith the increase in online business, international payments made through consumer/business credit cards are becoming more common. These transactions are limited to the credit available on the credit card and often incur high fees for a seller as well as a buyer for currency exchanges.SWIFTSWIFT (Society for Worldwide Interbrain Financial Telecommunication) is a computer based standardized message writing system that connects worldwide participating banks, primarily for the purpose of communicating payment information. When an issuing bank instructs an advising bank by an authenticated teletransmission to advise a documentary credit or an amendment to a credit, the teletransmission will be considered to be the operative instrument. This is called SWIFT.• Most documentary credits are transmitted electronically either by telex or through the SWIFT interbank telecommunication system. When documentary credits are transmitted in this way the telecommunication itself becomes the actual documentary credit or "operative instrument." Should the issuing bank send a mail confirmation, the advising bank is under no obligation to compare the two instruments to ensure that they are identical. • Sometimes, an issuing bank will send a brief telex/SWIFT message to the advising bank to let the bank know the brief details of the documentary credit and to advise that full or complete details will follow by mail. The issuing bank must send the actual documentary credit by mail without delay. The pre advice is not the operative instrument. Once an issuing bank has issued a pre advice, it must issue the operative instrument without delay unless the pre advice indicates that the issuing bank may choose not to issue the credit. Should the latter happen, the beneficiary should exercise extreme caution before taking any action to begin production or otherwise act as if the credit were on its way. • If a bank uses an advising bank to have the documentary credit advised to the beneficiary, it must also use the services of the same bank for advising an amendment(s). SummaryHaving completed this lesson, you should now understand the many methods by which funds can be transferred between buyer and seller and the risks associated with each form of funds transfer.ResourcesPublicationsSWIFT Channel Between Corporations and Banks, Treasury and Risk Management, Vol. 15, Issues, 9, October 2005, pp. 16 17.Web ResourcesSWIFT:• www.swift.com • www.bizhelp24.com
|
About Us | Terms of Use | Contact Us | Partner with Us | Press Release | Sitemap | Disclaimer | Privacy Policy
©1999-2011 OpenLearningWorld . com - All Rights Reserved