The global letter of credit (L/C) confirmation market size is projected to reach nearly US$5 billion by 2027 according to market research company, Valuates Reports.

It says that major factors driving market growth include the rise in demand for customised trade finance solutions and the growth of strict regulations for secured L/C confirmation services.

Growing market

The report, Letter of Credit Confirmation Market: Global Opportunity Analysis and Industry Forecast, 2020-2027, says the L/C confirmation market size is set to grow at a compound annual growth rate of 3.18 per cent from 2020 to 2027.

The market was valued at US$4.3 billion in 2019 and is projected to reach US$4.99 billion by 2027 according to the report.

Drivers of growth

The increased risk of non-payments is expected to drive the growth of the L/C market size according to the report which says that as global trade grows, importers and exporters are generally taking steps to secure their trade documents to avoid payment risks.

The report finds that due to a lack of confidence between the exporter and the issuing bank located in a country of high political or economic instability, confirmation of L/Cs is considered a safe option for global trading.

Therefore the report concludes that traders prefer to use L/C confirmation services, thereby increasing its market size.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.