ec-Finance.com

B2B Gets Online Letters of Credit
by Richard Brown, Line56

10/11/00 - E-commerce gained a new financing tool today with the launch of the first online letters of credit facility designed for B2B exchanges.

Fifth Third Bancorp announced it will use ec-Finance (ECF) FASTLCT to issue online letters of credit for B2B exchanges. This Web-based financing option allows buyers and sellers on B2B exchanges to complete financing of their transactions online "in an efficient and secure environment."

A letter of credit is a financial instrument issued by a bank to pay a seller on behalf of a buyer, providing the seller meets the terms and conditions stated in the credit application. In this process, banks act as intermediaries and are under no contract for goods bought and sold.

A recent Forrester Research survey of B2B exchanges reported that only 52 per cent arrange credit and offer alternative payment options. Yet 98 per cent of these exchanges plan to offer trade financing options by 2001.

ECF provides online trade financing products suited to established financial institutions, buyers and sellers, and B2B exchanges. With its principal ec-LC product, ECF allows buyers to apply for letters of credit and buyers and sellers to negotiate amendment and discrepancy requests online. The companies say all links in the supply chain can monitor the status of the letters of credit. FASTLC permits the acquisition of letters of credit from B2B exchanges that are then executed by one of ECF's bank payment partners.

According to John Perez, vice president, international banking, Fifth Third Bancorp, with FASTLC, Fifth Third will enter the online import/export trade financing business. Fifth Third has offices in Brussels and Hong Kong and boasts a range of international products and services including paying & receiving, letters of credit/documentary collections, foreign exchange trading/hedging services (including Internet-based), automated wire & draft system, international corporate lending, banker's acceptances, export financing and multi-currency accounts.

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