At its April 10 educational workshops, the NCBFAA, the National Customs House Brokers and Freight Forwarders Association of America hosted a session entitled “Bank Payment Obligations: An International Payment Option for Today’s World.” Moderated by USCIB’s Cynthia Duncan, Hector Baltazar of J.P. Morgan Chase reported to the freight forwarding community on a third method for the payment settlement of an international transactions, namely bank payment obligations (BPO).
As described by Baltazar, a BPO is a cross between a traditional letter of credit and the increasingly common open account. World trade is expected to rise by 8.7 percent by 2020 and it is predicted that open account, a payment method without agreed norms, will not practically serve all needs. Rather BPOs, which combines the agreed standards of letters of credit and the flexibility of open account payments, are becoming the increasingly popular alternative.
The International Chamber of Commerce (ICC), along with SWIFT (Society of Worldwide Interbank Financial Telecommunications) has recently authored The Uniform Rules for Bank Payment Obligations. More than 50 banks worldwide, including the Bank of America, HSBC, J.P. Morgan Chase and Citibankhave agreed to these BPO standards, supporting Baltazar’s contention the BPO will grow rapidly in the years to come.
Contact: Elizabeth Cafaro, USCIB
(212)703-5087 or ECafaro@uscib.org