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Compliance Oct 25, 2026 8 min read
LC vs SBLC vs TT for Fuel, Chemical and Lubricant Transactions
A buyer's guide to international payment instruments for bulk industrial procurement.
Michael Chang
Technical Director
Choosing the right payment instrument mitigates risk for both buyer and seller in multi-million dollar bulk commodity transactions.
Payment Instrument Comparison
- Telegraphic Transfer (TT): Cash wire. Highest risk for buyer if paid in advance. Often structured as 30% advance, 70% against copy of shipping documents.
- Documentary Letter of Credit (DLC): Bank guarantees payment upon presentation of specific shipping and inspection documents. Highly secure for both parties.
- Standby Letter of Credit (SBLC): Acts as a failsafe. Payment is made via TT, but the SBLC guarantees payment if the buyer defaults. Used for long-term revolving contracts.