Can a Beneficiary Present Directly to the Issuing Bank?

Intro

 In the world of letters of credit, everyone loves a shortcut — especially when it promises faster payment. It’s no surprise that beneficiaries often ask Mr. Old Man: “Why don’t I just send the documents straight to the issuing bank? Wouldn’t that speed things up? The confirming bank can be skipped, right?”

It sounds simple, but in LC operations, the “shortcut” can easily turn into the “long way around,” carrying risks that are not immediately obvious.

In today’s Q&A, Mr. Old Man looks at a common question: Can a beneficiary present directly to the issuing bank — and if so, what are the real risks involved?

Let’s break it down.

 Question

Dear Mr. Old Man,

“Is it permissible for the beneficiary to present documents directly to the issuing bank, bypassing the confirming bank, to speed up payment? Are the risks limited to difficulty correcting discrepancies and possible loss of documents in transit?”

Best regards,

Trade Finance

____

Answer

Dear Trade Finance,

Yes — under UCP 600 sub-article 6(a), a credit available with a nominated bank is also available with the issuing bank.

So direct presentation is technically allowed.

But in practice, it is not encouraged, especially when the credit is confirmed. Here’s why:

1. Loss of confirmation protection

If the beneficiary bypasses the confirming bank, the confirming bank’s undertaking does not arise.

This exposes the beneficiary to issuing bank risk and country risk.

2. No Article 35 protection

If documents sent directly are lost in transit, Article 35 does not protect the beneficiary.

The loss is entirely the beneficiary’s risk.

3. Slower processing

Direct presentations often take longer because the issuing bank must verify:

• the legitimacy of the presenter,
• whether any other bank has already presented,
• and document routing.

When documents are sent via the beneficiary’s bank, authentication is faster and more reliable.

4. Higher discrepancy risk

The beneficiary’s own bank can help detect and fix discrepancies before forwarding documents — a valuable safety net lost in direct presentation.

Conclusion

Direct presentation is allowed, but it is rarely the best option.

For speed, safety, and protection, beneficiaries should normally present through their own bank — and through the confirming bank when the credit is confirmed.

Best regards,

Mr. Old Man