Payment methods in international trade

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Payment methods in international trade

Payment methods in international trade Similar to those in domestic trade Added risks involved in cross-border transactions. Four commonly used terms of payment – each of them defers in level of risk and stability for buyer and seller.

Key factors determining the payment method Relationship between the seller and the buyer The length of business relationship between the parties (most important factor) Nature of merchandise Distance between seller and buyer Currency fluctuations Political and economic stability

1. Payment means Ways to effect payment: Bank draft Bank cheques Drafts Bills of exchange (documentary bills, e.g. Bill of lading + commercial invoice)