Irrevocable Letter of Credit (ILOC)

An irrevocable letter of credit (ILOC) is a bank-issued document guaranteeing that a buyer’s payment to a seller will be honored. This payment assurance becomes crucial in international trade, providing security for both buyers and sellers. Once issued, ILOCs cannot be canceled or altered without the consent of all parties involved, including the buyer, the seller, and the bank. These guarantees enhance trust and facilitate transactions across borders, reducing associated risks.