South Korea is making a concerted effort to migrate traders from paper-based to electronic letters of credit (L/Cs).

The effort is being led by the Korea International Trade Association (KITA), which a report in a Seoul-based English language daily has said will establish an electronic L/C management system over the next two months.

World first

The L/C management system will be in place by the end of September and ready for service in October according to the JoonAng Daily, which claims this is the first service of its kind in the world.

Once the electronic service begins, exporters will not have to visit banks to receive L/Cs or collect payments the report says. All they would need to do is to go on to the Internet and check whether the L/C was issued or if the payment was received it adds.

Participants

The Korea Financial Telecommunications & Clearings Institute will participate in the system which 19 Korean and 37 foreign-owned banks have apparently already signed up to.

Korean traders use around 600,000 L/Cs a year according to the JoonAng Daily, which adds that L/Cs are used to make 30 per cent of all export payments.

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