PPR Pipe Payment Terms: What an L/C and a T/T Deposit Each Protect

Neither instrument protects your pipe. A letter of credit is a bank’s undertaking to pay against documents that appear on their face to comply. Under UCP 600 article 5 banks deal with documents and not with goods, and article 34 disclaims the description, quantity, quality, condition and existence of whatever those documents describe. A T/T deposit protects the seller, by definition. What protects the container is the original bill of lading set, an inspection you named as a required document before the credit was opened, and wording agreed before money moved. Below: what each instrument allocates, what one published bank tariff charges, and how your Incoterms rule decides which documents can exist.

The rules quoted are the editions in force: UCP 600, ICC Publication No. 600, effective 1 July 2007, and Incoterms® 2020. This is a reading of published rules and one published price list, not legal or financial advice — take your transaction to your own bank or trade-finance adviser.

Before the bank instruments, the rule underneath them. The Chartered Institute of Export & International Trade walks through Incoterms® 2020, the edition in force — which is what decides, in section five below, whether the document your credit calls for can exist at all.

What a Letter of Credit Actually Undertakes

Start with the article buyers never read. UCP 600 article 4 makes a credit a separate transaction from the sale contract it rests on, and says banks are in no way concerned with or bound by that contract even where the credit refers to it. Your purchase order and your agreed wall thickness are not the issuing bank’s business. Article 14(a) has the bank examine the presentation on the basis of the documents alone, to see whether they appear on their face to comply. Nobody opens the container.

Article 34 states the limit in the rulebook’s plainest language: a bank assumes no liability for the description, quantity, weight, quality, condition, packing, delivery, value or existence of the goods a document represents. So a credit prevents a supplier shipping and going unpaid. It does not prevent thin pipe with a clean invoice.

One lever closes that gap, and it has to be pulled before issuance: name an independent pre-shipment inspection certificate, from a body you choose, among the required documents. That turns a question about goods into a question about paper — the only kind the bank will answer. Added later it costs an amendment, USD 30 on the tariff below, plus your supplier’s consent, given once it already holds a workable credit. What happens at presentation, from tolerances to clocks to the refusal notice, is covered in our guide to MOQ, samples and payment terms for one container.

Where a Wire Transfer Leaves the Risk

A T/T deposit has a formal name, and the name is the analysis. The US International Trade Administration classes advance payment by wire as cash-in-advance: the most secure method for the exporter, because the importer pays before the goods ship, and in the same breath the least attractive option for the buyer. Arguing about the percentage is arguing about how much of the deal sits on that side of the line.

So the split suppliers usually propose, commonly 30% on order and the balance around shipment, deserves less attention than the two things around it. No rule and no published schedule sets that ratio. It is a negotiating custom, and repeating it as a standard tells a supplier which kind of buyer it has.

First, the balance trigger. “Against a copy bill of lading” and “against the full set of originals” read as paperwork and are not. UCP 600 article 20(a)(iv) requires a bill of lading presented under a credit to be the sole original, or the full set where more than one was issued. The original set is what the carrier releases cargo against. A copy is a photograph of the key.

Second, the gap between the payments. An inspection changes your mind only if it completes before the balance falls due and reports to you, not to the shipper. Otherwise the structure is a payment plan, not a control. The wires themselves are the cheap part, at USD 51 each on the tariff below.

The Middle Option, and What All Three Cost

Between them sits the documentary collection, under the ICC Uniform Rules for Collections. Banks pass shipping documents against payment or against acceptance of a draft. But as the International Trade Administration puts it, they do not verify that the documents are accurate and do not guarantee payment as they do with letters of credit. Its recommendation follows: established relationships in stable markets only. Collection moves documents in step with money and leaves credit risk where it was.

Table 1. What each instrument allocates, and to whom

Instrument	Failure it prevents	Failure it leaves open	Best for
Advance T/T, deposit and balance	Seller shipping and going unpaid	Everything on the buyer’s side until documents arrive	Repeat orders with a supplier you have already received from
Documentary collection, D/P or D/A	Documents released before money moves	Non-payment: under URC 522 no bank guarantees it	An established relationship in a stable market
Unconfirmed letter of credit	Payment without a complying document set	Goods risk under art. 34; issuing-bank and country risk	A new supplier, where your bank is accepted abroad
Confirmed letter of credit	The above, plus your issuing bank failing to pay	Goods risk under art. 34; the fee is yours to negotiate	A supplier that will not take your bank’s name alone

Source: UCP 600 arts. 4, 5, 8, 14, 20 and 34 (ICC Publication No. 600, in force 1 July 2007); ICC Uniform Rules for Collections URC 522; US International Trade Administration. Retrieved 5 September 2026.

Cost is the part every guide waves at. One published, dated schedule, Bank of Africa Uganda’s tariff effective 12 March 2026, prices all three on one page, in the kind of import market these readers ship into.

Table 2. One bank’s published charges for the three routes

Charge	Basis	Amount (USD equivalent)
Outgoing SWIFT transfer, charges borne by sender	Flat, per transfer	51
Import bill for collection, document handling	0.2% of bill value, per bill	26 minimum
Import credit established, cash covered	0.5% of credit value, plus SWIFT charge	40 minimum, plus 21
Import credit established, not cash covered	1% of credit value, plus SWIFT charge	68 minimum, plus 21
Credit running, then each amendment and each discrepancy	0.5% per quarter; flat per amendment; flat per incident	40 minimum per quarter; 30; 200

Source: Bank of Africa Uganda, “Your quick guide to our products and services prices”, effective 12 March 2026, letter of credit and international transfer sections. Retrieved 5 September 2026. One bank’s schedule in one country, quoted because it is dated and public, not a market rate. Ask your own bank for its tariff.

Two lines there matter more than the totals. The establishment commission halves when the credit is cash covered, which tells you what the bank is pricing: not the pipe, but its exposure to you. And the discrepancy fee is flat, per incident, on top of what the delay costs in demurrage and a missed sailing — which makes drafting the cheapest work in the transaction. A credit whose document list matches what your supplier and your carrier can physically produce is worth several hundred dollars before anyone ships.

What the bank charges on one container, by credit value. Source and method: Bank of Africa Uganda tariff effective 12 March 2026, applied to four order values, credit open one quarter. Two wires = 2 x USD 51. Collection = 0.2%, USD 26 min. Credit = establishment (0.5% cash-covered / 1% not, USD 40 / 68 min) + USD 21 SWIFT + one quarter at 0.5% (USD 40 min). Arithmetic on published rates, not quoted amounts; excludes confirmation, discrepancy and correspondent charges. One bank, one country..

Credit or transfer value (USD)	Two T/T wires (USD)	Collection (USD)	L/C cash-covered (USD)	L/C uncovered (USD)
20000	102	40	221	321
40000	102	80	421	621
80000	102	160	821	1221
160000	102	320	1621	2421

Confirmation: What the Second Bank Adds

UCP 600 article 2 defines confirmation as a definite undertaking of the confirming bank, in addition to that of the issuing bank, to honour or negotiate a complying presentation. Article 8(b) fixes the moment: the confirming bank is irrevocably bound as of the time it adds its confirmation. So confirmation is not approval of your supplier. It is a second bank stepping in front of your bank, and what it absorbs is the risk that your bank, or your country, does not pay.

That explains a line in the tariff above that looks like an omission. Against “confirmation charges by foreign banks” the schedule says Actual. The issuing bank publishes no number because it sets none: the confirming bank prices confirmation on its own reading of the issuer and the jurisdiction, which moves with the country, the bank and the month.

The same document does publish a confirmation commission on the export side, where this bank adds the undertaking: 0.6% of the credit amount per quarter with a cash margin, 0.5% without, minimum USD 200 either way. Note the unit: per quarter, so a six-month tenor is charged twice. It is worth paying when “would a bank in the seller’s country take my bank’s name unsecured?” is genuinely uncertain. Your own bank can answer that before you apply. And read the request as information: a supplier content with an unconfirmed credit recognises your bank; one that insists does not.

Confirmation over a six-month credit: where the minimum stops binding. Source and method: Bank of Africa Uganda tariff effective 12 March 2026, export-side confirmation where this bank is itself the confirming bank: 0.6% of credit value per quarter with a cash margin, 0.5% without, USD 200 minimum per quarter. Two quarters = a six-month tenor. Arithmetic on published rates with the minimum imposed, not a quote, and not the 'Actual' this bank records for confirmation added abroad..

Credit value (USD)	0.6% cash margin (USD)	0.5% no margin (USD)
20000	400	400
40000	480	400
80000	960	800
160000	1920	1600

The Incoterms Rule Decides Which Documents Can Exist

The two systems meet at the document list, and ICC says so on its own Incoterms® 2020 page. Free Carrier was revised for 2020, it writes, to cater to a situation where goods are sold FCA for carriage by sea and a party’s bank requests a bill of lading with an on-board notation. FCA article A6/B6 now lets the parties agree that the buyer instructs the carrier to issue an on-board bill of lading to the seller. The seller then tenders it to the buyer, often through the banks. The rule changed because credits ask for a document an FCA sale could not previously produce.

Insurance is the other collision. Under Incoterms® 2020 CIF keeps Institute Cargo Clauses (C) as its default while CIP requires the higher Institute Cargo Clauses (A) — one word, “insured”, two materially different policies. Set that beside UCP 600 article 28(f)(ii): with no instruction in the credit, the insurance document must show at least 110% of the CIF or CIP value. A silent credit on a CIF contract can leave you holding a (C) policy at 110% of value, which is not what most buyers picture when they read “insurance included”.

So: settle the Incoterms rule, draft the credit’s document list against it, then apply. Our comparison of FOB and CIF for a pipe container covers where risk and cost transfer under each, and the pipe import document checklist sets out the pack customs wants at the other end. A credit calling for a document your rule cannot generate is a discrepancy you have already agreed to pay for.

Conclusion

Four things to settle before anything is opened or wired. Name the failure you are buying protection against, then pick the instrument that covers it rather than the one that sounds safest. Put the inspection certificate in the document list, not in a side email. Fix the balance trigger and the original bill of lading set in one sentence. Ask your bank for its tariff, so the instrument is a line in your landed cost rather than a surprise at quarter end.

One thing on our side, plainly. IFAN publishes a one-container minimum with mixed sizes, FCL and LCL shipping and a full export document set; it publishes no payment terms, because they are quoted per order. Ask any supplier, this one included, for terms in writing before you plan around them, then take that document set to your own bank or trade-finance adviser.

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