The BPO can also be viewed as an electronic letter of credit and is an alternative means of settlement in international trade. It provides the benefits of a letter of credit (LC) in an automated environment and enables banks to offer flexible risk mitigation and financing services across the supply chain to their corporate customers.

Establish uniformity of practice

The BPO contractual rules will establish uniformity of practice in the market adoption of the BPO and the related ISO 20022 messaging standards.

Chairman of the ICC Banking Commission Mr Kah Chye Tan affirmed it was vital that the financial industry aligned on improved rules and tools in support of trading counterparties whether large or small. “The ICC Banking Commission views the development of the Bank Payment Obligation rules and the related ISO 20022 messaging standards as strong foundations for banks to provide modern risk and financing services aligned with today’s technology.”