Letters of credit are at present coming to be used more and more widely as a method of payment in the domestic market, since they provide trading partners with greater security that contractual obligations will be met. Domestic regulations governing settlements with letters of credit differ from international regulations: they are subject to the Civil Law of the Russian Federation and to the Statute on Clearing Accounts in the Russian Federation issued by the Bank of Russia.
Despite certain discrepancies between “internal” letters of credit and their counterparts in international usage (no clear-cut requirements for shipping documents, the prevalence of covered (deposited) letters of credit, the payment of documents subject to the buyer’s prior acceptance), the main advantages of the letter of credit as a method of payment — in particular, the payment obligation of the issuing bank, i.å. a third party — make them beneficial for buyer and seller alike.