What Factors Affect the Cost of a Letter of Credit?

Restricted negotiable letters of credit are those in which the issuing bank makes negotiation invitations and payment commitments to only one bank of the exporting party in the issuance clause, and only the negotiating documents are allowed by the bank. The valid date and place is the place where the negotiating bank is located. The payer of the draft can be the issuing bank, the applicant, the advising bank, or another bank. When issuing a restricted negotiation letter of credit, terms such as "invite × × line negotiation" or "limited to × line" are often added. This type of letter of credit is not widely used in international trade due to its limitations, but sometimes the issuing bank still issues it. The reasons are as follows: (1) The issuing bank consciously fights for its own joint bank or its designated agent bank. Soliciting negotiation services, increasing related fee income such as negotiating fees, and expanding the external influence of its designated negotiating bank. (2) Due to the complexity of the issuance clauses or certain issues that require strict scrutiny of the bill, designate its own joint bank or agent bank to negotiate exclusively to facilitate the intent of the issuing bank to ensure the quality of the documents. ^[1]