International trade is an economic activity in which parties located in different countries exchange goods and services. However, international trade involves much more than simply selling goods abroad or purchasing goods from another country. A transaction is completed only when various procedures—including contract formation, transportation, insurance, customs clearance, preparation of trade documents, payment, and trade finance—are systematically connected.
Payment is particularly important because it can determine the success or failure of an international transaction. An exporter seeks to receive payment securely after delivering the agreed goods, whereas an importer prefers to make payment only after confirming that the goods conform to the contractual terms. Because the interests of exporters and importers differ, international trade requires payment mechanisms capable of managing limited trust between the parties, geographical distance, differences in laws and commercial practices, exchange-rate fluctuations, political risk, and bank credit risk.
This book has been designed particularly for universities that educate international students and for the students themselves. In recent years, Korean universities have devoted considerable effort to attracting international students in response to the declining college-age population and changes in the educational environment. Despite the growing number of international students, however, educational programs and specialized textbooks that adequately reflect their language proficiency and academic backgrounds remain insufficient. Consequently, universities continue to face considerable difficulty in improving the quality of academic instruction in proportion to the quantitative expansion of international student enrollment.
One of the greatest difficulties international students face when studying academic subjects is obtaining appropriate textbooks. Textbooks published in English-speaking countries are often highly specialized and considerably more expensive than domestic textbooks, creating a substantial financial burden for students. Domestic textbooks, by contrast, are generally written primarily for Korean-speaking learners and may therefore be difficult for international students with limited Korean proficiency to understand accurately.
Educators encounter similar difficulties. Even when an instructor is capable of teaching in English, it may not be easy to explain naturally all the detailed technical terminology and practical expressions used in international trade and trade payment. Considerable time and effort are also required to prepare separate English-language lecture materials, terminology explanations, cases, and summaries that correspond to the comprehension level of international students. These difficulties may reduce instructional efficiency and increase the academic burden on both instructors and students.
This textbook has been published in an effort to alleviate these practical problems. By presenting Korean and English together, it enables international students to learn Korean academic terminology and internationally accepted English terminology at the same time. Students can systematically study concepts, terminology, transaction procedures, and practical cases through a single textbook, while instructors can reduce the burden of repeatedly preparing separate English-language materials and concentrate more effectively on the core content of their courses.
Above all, the book explains complex concepts in accessible language and enables readers to identify the essential points of each topic quickly through summary tables and transaction-flow diagrams. This structure facilitates student comprehension and review while helping instructors deliver more content efficiently within limited class time. Clear explanations and well-organized summaries are among the principal strengths of the book because they improve both the pace of learning and the efficiency of instruction.
This textbook has been written to provide a systematic explanation of the fundamental principles and practical procedures of international trade payments, focusing on remittance, collection, letters of credit, and other specialized payment methods. Rather than requiring students merely to memorize definitions, the book explains why each payment method is needed, how it operates, and what benefits and risks it creates for the parties concerned.
Each chapter begins with a narrative explanation of the core concepts and then presents the transaction procedures and the roles of the parties step by step. Comparison tables and transaction-flow diagrams are also provided so that students can clearly distinguish between similar payment methods. Important technical terms are presented in both Korean and English, enabling Korean students and international students alike to become familiar with the English terminology and practical expressions commonly used in international trade.
The book begins with fundamental concepts so that students studying international trade for the first time, including non-majors, can understand the subject without difficulty. At the same time, it connects theory with practice by examining payment-collection risk, documentary discrepancies, refusal of payment, the role of banks, credit risk, and country risk that may arise in actual transactions. Instead of presenting the characteristics of each payment method in isolation, the book emphasizes an integrated understanding of the relationships among the seller, buyer, banks, carriers, and other principal parties.
The textbook also includes major examination concepts and case-based questions to assist students preparing for trade-related qualifications, including the International Trade Specialist and Trade English examinations. Rather than presenting only the correct answers, the explanations clarify why each option is correct or incorrect, thereby helping students understand the underlying concepts and apply them to unfamiliar cases.
The international trade environment is changing rapidly because of digitalization, the expansion of electronic trade, the restructuring of global supply chains, and increasing geopolitical risk. Nevertheless, the fundamental principles of trade payment—how goods and documents move between the parties and who pays, when payment is made, and under what conditions—remain essential. A precise understanding of traditional mechanisms such as remittance, collection, and letters of credit is also necessary for understanding emerging payment technologies and financial instruments.
It is hoped that this book will serve as an accessible introduction for students encountering international trade payments for the first time, a systematic study guide for learners preparing for professional examinations, and a practical reference for trade practitioners seeking to review transaction structures and risks. Above all, the book is intended to support Korean and international students from different linguistic and educational backgrounds in studying and communicating through a shared textbook.
Part. 2➟ ½Å¿ëÀå Letter of Credit47
1. ½Å¿ëÀåÀÇ °³³ä Concept of Letter of Credit47
2. ½Å¿ëÀå ¹ßÇà ¼ø¼ Issuance Order of a Letter of Credit48
3. ½Å¿ëÀåÀÇ ÀÌÁ¡ Advantages of a Letter of Credit51
4. ¼öÃâ»ó ÀÔÀå¿¡¼ÀÇ ÀÌÁ¡ Advantages for the Exporter52
5. ¼öÀÔ»ó ÀÔÀå¿¡¼ÀÇ ÀÌÁ¡ Advantages for the Importer53
6. ³»±¹½Å¿ëÀå Local Letter of Credit55
7. ³»±¹½Å¿ëÀåÀÇ ÀåÁ¡ Advantages of a Local Letter of Credit57
8. ³»±¹½Å¿ëÀå ¹ßÇà¿ä°Ç Requirements for Issuance of a Local Letter of Credit58
9. ½Å¿ëÀåÅëÀϱÔÄ¢ Àû¿ë¿øÄ¢ Principles for Application of UCP59
10. ½Å¿ëÀå °Å·¡ÀÇ ´ç»çÀÚ Parties to a Letter-of-Credit Transaction60
11. ±¹Á¦¹«¿ª»ç ¹®Á¦ International Trade Specialist Questions62
12. ¹«¿ª¿µ¾î ¹®Á¦ Business English Questions66
13. Final Summary68
Part. 3➟ ½Å¿ëÀå°Å·¡ ´ç»çÀÚ
Parties to a Letter of Credit Transaction71
1. ½Å¿ëÀå°Å·¡ ´ç»çÀÚÀÇ Àüü ±¸Á¶
Overall Structure of the Parties in a Letter of Credit Transaction71
2. °³¼³ÀºÇà Issuing Bank72
3. ½Å¿ëÀå¼öÀÍÀÚ Beneficiary74
4. È®ÀÎÀºÇà Confirming Bank75
5. ÅëÁöÀºÇà Advising Bank76
6. ÁöÁ¤ÀºÇà Nominated Bank77
7. »óȯÀºÇà(°áÁ¦ÀºÇà) Reimbursing Bank78
8. ¾çµµÀºÇà Transferring Bank79
9. ¸ÅÀÔÀºÇà Negotiating Bank81
10. ´ç»çÀÚ ºñ±³Ç¥ Comparative Table of Parties82
11. ±¹Á¦¹«¿ª»ç ¹®Á¦ International Trade Specialist Questions83
12. ¹«¿ª¿µ¾î ¹®Á¦ Business English Questions86
13. Final Summary88
Part. 4➟ ½Å¿ëÀå°Å·¡ÀÇ Æ¯¼º
Characteristics of Letter of Credit Transactions91
1. ½Å¿ëÀå°Å·¡ÀÇ ±¸Á¶Àû º»Áú Structural Nature of Letter of Credit Transactions91
2. µ¶¸³¼º ¿øÄ¢ Principle of Independence92
3. Ãß»ó¼º ¿øÄ¢ Principle of Abstraction94
4. ¾ö¹ÐÀÏÄ¡ÀÇ ¿øÄ¢ Principle of Strict Compliance95
5. »ó´çÀÏÄ¡ÀÇ ¿øÄ¢ Principle of Substantial Compliance96
6. Áö±Þ±ÝÁö¸í·ÉÀÇ ¿øÄ¢ Principle of Injunction97
7. »ç±â°Å·¡ ¿øÄ¢ Fraud Rule98
8. ½Å¿ëÀå°Å·¡ÀÇ ÇѰè Limitations of L/C98
9. ÇÙ½É ºñ±³Ç¥ Comparative Table99
10. ±¹Á¦¹«¿ª»ç ¹®Á¦ International Trade Specialist Questions99
11. ¹«¿ª¿µ¾î ¹®Á¦ Business English Questions101
12. Final Summary104
Part. 5
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▪Sung-Woo, Ryoo
∙Ph.D. in International Trade, Pusan National University
∙Current Professor, Department of International Business, Daejin University
∙Level 1 Specialist in International Trade.
∙Certified Professional Logistician(CPL)
∙Certified English Interpreter
∙Vice President, Korean Association of Trade and Commerce.
∙CEO, Wellcom VILTER Korea Co., Ltd. (For 20 years, Export Manufacturing Company)