Foreign Payments

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A documentary letter of credit

is a written undertaking of a bank, that on the basis of a request by its client (buyer, applicant), to provide to the entitled person (beneficiary, seller) certain performance (pay a agreed sum) upon the presentation of certain documents evidencing delivery of the goods or services. Presented documents must comply with the conditions presribed in the letter of credit.

Advantages and Characteristics of a Documentary Letter of Credit

  • One of the most widespread payment instruments in international trade that is governed by Uniform Customs and Practise for Documentary Credits (under the patronage of the International Chamber of Commerce)
  • Used primarily among business partners who are beginning to trade with one another, for contracts for higher amounts, for securing longer-term contracts, and in riskier territories
  • Eliminates risks of both parties (guarantee to the seller that he received settlement from issuing bankand to the buyer that he will receive the goods in agreed quality)
  • We offer clients consultation in order to help them reduce their business risks
  • Domestic letter of credit is used primarily to secure real estate transactions and ise subject to a more advantageous rate than foreign letters of credit

Import Documentary Letter of Credit (Client)

  • Opened on the basis of a written clients (buyers) request that srictly comply with signed contract
  • The client arrange the ensuring of the letter of credit by cash or a loan
  • By issuing the letter of credit, the bank assumes the obligation to pay to the seller (recipient of the letter of credit) the appointed amount, once the conditions specified in the letter of credit are satisfied

Export Documentary Letter of Credit

  • Opened by the issuing bank in favour of the client (seller). Advising bank gives the client written advice of the opening of the letter of credit
  • After approval the conditions of the letter of credit, the client despatch the goods, obtains the documents required by the letter of credit, and submits them to the advising bank
  • After checking of the prescribed documents the advising bank will send them to the issuing bank for payment

Documentary collection

is a written order of the seller (exporter) for his bank to forward documents related to the export of goods to the buyer´s bank with a request to present these documents to the buyer for payment. The documents are followed by collection and payment conditions of the seller´s bank.
The documents are released to the buyer against immediate payment or against the acceptance of a bill of exchange (it means that amount of documents will be paid in future).

A documentary collection as a payment instrument is used primarily in international trade. Unlike with a documentary letter of credit, this payment instrument does not represent any undertaking on the part of the bank – it only intermediates the collection.

Benefits

  • It is a cheaper product than a documentary letter of credit, but do not provide the same level of security as letter of credit
  • It does not deposit the buyer’s money before payment
  • The seller is certain that the goods will be handed out to the buyer only once the collection conditions are satisfied
  • If a bill of exchange is used, it represents a court-enforceable obligation of the debtor

Import Documentary Collection (Client)

  • The bank processes an import documentary collection on the basis of a collection order of the sending bank
  • The bank informs the buyer about receiving of the documentary collection , notify about the collection conditions and invites him to pay or accept a bill of exchange
  • After payment or acceptance of a bill of exchange, it release the collection documents to the buyer

Export Documentary Collection (Supplier)

  • The bank provides export documentary collections for its clients on the basis of a written order
  • The seller collects the documents required for the shipment and submits them to the bank to arrange for a collection, with instructions as to what to do with the documents
  • The bank sends documents to the collecting bank and sets the conditions under which the documents can be released to the buyer
  • The bank monitor the progress of the documentary collection and, , if required, sends regular payment reminders
  • The bank provides the collection of domestic bills of exchange subject to the same conditions

What is IBAN (International Bank Account Number)?

IBAN is an international bank account number standard. It was developed in cooperation between the European Committee for Banking Standards and the International Organisation for Standardisation (ISO).

What is it used for?

It serves in the unambiguous identification of the client's account, the country in which the client's account is maintained, and the code of the bank. The listing of the payee's IBAN and the BIC of the payee's bank serve to support the automated processing of cross-border payments.

What is the European Economic Area (EEA)?

The European Economic Area includes European Union Member States: Belgium, Croatia, Denmark, Finland, France, Ireland, Italy, Luxembourg, Netherlands, Germany, Portugal, Austria, Greece, Spain, Sweden, Great Britain, Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia, Slovakia, and EEA countries: Iceland, Lichtenstein, Norway.

What is the structure of an IBAN?

An IBAN for the Czech Republic always has 24 alphanumeric characters with the following structure:

  • Written format: CZ34 0600 0000 0001 2345 6789
  • Electronic format: CZ3406000000000123456789

For which payments is an IBAN used?

The account number in IBAN format is obligatory for transfers in member countries within EEA, Monaco, Switzerland and San Marino.

What is a BIC?

BIC is the SWIFT address of the bank and has 8 or 11 characters.

MONETA Money Bank's BIC is: AGBACZPP

Can an IBAN be also used in domestic payment transactions?

No, an IBAN is used exclusively in foreign payment relations.

Where can I get my IBAN?

The IBAN and BIC of your bank are stated on your account statement, or you can request it at the point of sale where your account is maintained.

Will a cross-border payment be processed if the payee's account number is not stated in the IBAN format, or if the BIC is not filled in?

YES, the payment will be processed, but may be subject to a different fee.

Is there a difference in the fee amounts if the payee's IBAN and the BIC of the payee's bank are not stated on a payment sent within the EEA in EUR?

YES. If the IBAN or BIC of a payment sent within the EEA in EUR is not provided, MONETA Money Bank can charge different fees and a foreign bank will request an additional fee increase to be debited from the client's account.

What do I need to tell my foreign partner who is sending me a cross border payment?

For the payment to be processed automatically and to prevent a fee increase, you need to inform him of:

  • Your account number in the IBAN format
  • MONETA Money Bank's BIC: AGBACZPP

What do I need to learn from my foreign partner to whom I am sending a cross-border payment?

For the payment to be processed automatically and to prevent a fee increase, you need to find out: the payee's account number in the IBAN format, and the BIC of the payee's bank.

 

What is the rate of the increased fees if the payee's IBAN and the BIC of the payee's bank are not stated on a cross-border payment?

  • MONETA Money Bank fees are stated in the current List of Tariffs
  • Fees charged by foreign banks are individual, based on the particular bank and its List of Tariffs

Is the generation of an IBAN subject to a fee?

NO, the generation of IBAN is not subject to a fee and does not have any impact on your contractual relations with MONETA Money Bank.

Calculator for an informative IBAN calculation

If you want to know what your account may look like in the IBAN format, calculate it using the following calculator. Your exact format will be provided to you at a MONETA Money Bank branch.

Enter the account number from the agreement on bank products and services:
Part one = prefix, if the account has none, then leave blank
Part two = core of the account number – up to 10 numeric characters
Bank code = bank code with 4 numeric characters (e.g.: 0600)

The Most Broadly Used Instrument for Foreign Currency Payments

Clean payments are the most broadly used (non-documentary) instrument for paying a client's account receivable or payable in a foreign currency.

Payments Abroad can be processed from clients CZ or FX current accounts in these currencies: CAD, DKK, EUR, GBP, CHF, JPY, NOK, SEK, USD, CZK, PLN, RUB.

We distinguish the following kinds of clean payments:

  • Payments from abroad
  • Payments to a foreign country
  • Domestic payments for a payee (in a foreign currency)

Benefits of Clean Payments

  • The simplest, fastest, and cheapest international payment instrument
  • Far shorter processing time and delivery time on clean payments (compared to the time required for the delivery of a cheque)
  • Payments to be credited to our clients' accounts following the verification of coverage by the foreign currency set by the foreign bank

International Payments for Everyone

The clean payment instrument can be used by the following entities:

  • Legal entities and individuals - entrepreneurs
  • Entities engaged in activities other than business (municipalities, state authorities, organizations receiving contributions or fully funded from public budgets, foundations, etc.)
  • Individuals

Choose Clean Payments

If you are interested in using clean payments, visit a MONETA Money Bank branch and complete the form for foreign payment transactions.

If you own the BankKlient, Internet Banking or Multicash service, enter the clean payment through this direct banking channel. Your MONETA Money Bank branch will tell you the account number in the IBAN format or you can find it on your account statements.

 

Payment Processing

Clean Payments Abroad

To use a clean payment, you need to know the payee's bank information, i.e., account number, BIC of payee's bank or precise name of the payee's bank and the city in which the bank is located.

For payment transactions within the EEA (European Economic Area) in EEA currency, only SHA (shared) charge/instruction may be applied. The clients will be charged with MMB fee, according to the valid price list, and intermediary bank fee for an EEA payment transaction.

Clean Payments from Foreign Countries

We accept payments from abroad on the basis of SWIFT messages.

For money to be sent to the payee's account expeditiously and correctly, the foreign partner needs to be informed about the correct account number, payee's name, and the precise name of the payee's bank.

 

S.W.I.F.T.

At the client's order, the Bank executes his/her international payment transfers to the payee's account at his/her bank through the Society for Worldwide Interbank Financial Telecommunication – SWIFT registered in Belgium. Presently, there is no other organisation providing these services to such a worldwide extent, and the Bank therefore has no alternative than to use the SWIFT network for executing international payments, if it wishes to offer its clients global payment services. The SWIFT network which the Bank uses, like other banks offering international payments, complies with the highest security requirements, both technically and organisationally.

The SWIFT corporation has operational centres in Europe and in the US, where all data from financial transactions are stored temporarily, and this data is, in order to ensure the smoothness of payments, simultaneously stored in identical form on several geographically disparate servers, which correspond to international standards as well as to bank oversight requirements.

Since 11 September 2001, the US Treasury Department has demanded, by means of subpoenas, information about payment transactions from the SWIFT centre in the USA, for the purpose of fighting terrorism. According to the communication of SWIFT representatives, an agreement was reached between the company and the US Treasury Department, according to which the volume of the data requested, covered by a subpoena issued by a US court, will be restricted to the necessary minimum, and their use solely for the purpose of fighting against terrorism is guaranteed. It must be stressed that the provision of data from payment transactions on the basis of a subpoena is legal in the USA, and our Bank has obtained the information about its provision and release to US authorities through the Czech Banking Association. At the same time, the Bank has received information about the entire matter being discussed on the international level, as regards the European legal regulation of bank secrecy.

The Bank hereby informs its clients that their information stated on international payment transactions (name and address, if provided, account number, amount, and purpose of the payment, if provided) may constitute a part of the information provided by SWIFT to the US Treasury Department for the purpose of fighting terrorism.

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