THE CAD CONNECTION – A STORY FROM OVER 30 YEARS AGO

How a rookie banker, a stone carver, and an American tourist stumbled into a payment method none of them could name… yet.

Back in the mid-1990s, Vietnam was just beginning to open up to the world. Foreigners were trickling in — carrying hard currency, curiosity, and occasionally, some very strange business proposals.

I had just started my banking career at Vietcombank Da Nang, fresh-faced and clueless, doing a bit of everything: decoding telex messages, shuffling dollar balances, writing reports, and serving as an ad hoc interpreter for my boss. I didn’t know much, but I knew how to nod like I did.

One morning, fate walked into the bank — in the form of a dusty stone carver from Non Nuoc village and an American tourist with a backpack full of dreams. They were stuck in a payment standoff over two stone lions. Neither trusted the other. And somehow, I got pulled in to fix it.

What happened next was part diplomacy, part improvisation — and unknowingly, my very first encounter with a thing called CAD.

Read on to find out how I (accidentally) invented CAD — before I even knew what it was.

______

Back in the mid-1990s, Vietnam had only recently opened its doors to the world. Foreigners began to visit more often, bringing with them hard currency, curiosity… and some rather unusual business deals.

At that time, I had just joined Vietcombank Da Nang, assigned to the Credit & Planning Department. I did a bit of everything: encoding and decoding test keys in outgoing and incoming telex messages, transferring foreign currency between correspondent banks, compiling statistical reports… and even serving as the boss’s interpreter.

One morning, a man who introduced himself as a stone carver walked into the bank with an American tourist carrying a bulky backpack. They had just come from Non Nuoc Stone Village and presented a typed sales contract. According to it, the American wanted to purchase a pair of stone lion statues for USD 2,500 — a significant amount for a local stone carver at the time.

The problem was that the American buyer didn’t want to pay upfront without a guarantee of delivery, while the stone carver insisted on receiving payment first before shipping the goods overseas. Understandably, he feared that once the lions left Vietnam, there’d be no recourse if the buyer vanished. Neither side would budge, so they came to the bank for advice.

By a twist of fate, I was initially just translating — but somehow got pulled into playing the role of “deal advisor and transaction architect.”

After hearing the full story, I came up with an idea — something I’d never learned from a textbook but that sounded fairly professional:

“Why don’t you open an escrow account at my bank?

The buyer would deposit USD 2,580 into it (including courier and service fees), then issue a letter of authorization.

When the seller presents all the required documents — invoice, bill of lading, packing list, etc. — the bank would automatically release the funds for payment.

If the documents aren’t received by the deadline, the bank would return the money to the buyer’s account in the U.S.”

My boss nodded. The American gave me a friendly pat on the shoulder. The stone carver broke into a wide smile.

I helped draft the authorization letter and had the American sign it.

And just like that, I found myself executing the very first international payment transaction of my career — involving a payment method I didn’t even know the name of at the time.

A month later, the deal went through without a hitch. The two lion statues crossed the ocean to the U.S., leaving behind a sample escrow agreement that would go on to inspire many similar transactions.

Even more unexpectedly, that very same stone carver — thanks to that “CAD connection” — went on to build a thriving business, eventually becoming one of the most successful figures in Non Nuoc Stone Village. Every time we meet, he reminds me:

“If you hadn’t shown me that CAD method back then, I’d probably still be carving stone for hire!”

After that transaction, Vietcombank Da Nang began applying the CAD method for many other customers — from backpacker tourists to Chinese seafood traders.

As for me, it wasn’t until a few years later, during formal international payments training, that I had a small epiphany:

The method I had proposed back then… was actually called CAD – Cash Against Documents!

And so, from one stone lion transaction, I found myself drawn to the world of international trade finance — never imagining I would one day become someone with a bit of a voice in the LC and trade finance community.

It all began on a quiet morning in Non Nuoc Stone Village — Đà Nẵng, Vietnam.

LAST BUT NOT LEAST

Many documents and online sources tend to equate CAD (Cash Against Documents) with D/P (Documents against Payment). But in reality — as illustrated in the story above — CAD is not always the same as D/P.

• In international trade finance, D/P is an official collection method governed by URC 522, where the bank merely holds the documents and releases them only when the buyer makes payment. The bank does not make decisions or disburse funds on its own.
• CAD, on the other hand, is a general term describing the principle of “payment against documents.” How it is executed can vary depending on the agreement between the parties involved.

In my case, the CAD mechanism was carried out as follows:

• The buyer deposited the funds in advance into an account,
• Issued a letter of authorization to the bank,
• And the bank made payment once the seller presented complete documents.

Clearly, this wasn’t a traditional D/P, but rather a custom-designed CAD arrangement — a combination of trust, flexibility, and the bank’s proactive role as an intermediary.

So yes, not every CAD is a D/P, and not every D/P offers the flexibility of CAD.

What matters most is understanding the structure behind the label.

Sometimes, a timely idea — even if you don’t know the right name for it yet — can spark a lifelong professional journey.

Understanding CAD correctly is not just about terminology.

It’s about trust, flexibility, and a little bit of fate in the profession.

______

Mr. Old Man, August 2025