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Letters of Credit Explained: Trade Securely and Get Paid

A plain-English guide to how LCs protect buyers and sellers.

Trade Finance  By Royal Consultancy · January 8, 2026

A letter of credit is a bank’s promise to pay the seller once compliant documents are presented.

It protects the buyer (payment only on proof of shipment) and the seller (a bank guarantee rather than trusting the buyer).

The risk is discrepancies: even a minor documentation error can delay payment. That is why expert LC review pays for itself.

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