SWIFT MT 700: The Documentary Credit Message Explained

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In international trade finance, a SWIFT MT 700 message is a standardized way to issue a documentary credit (more commonly known as a letter of credit) between banks. It is a crucial message type used to securely transmit the terms and conditions of an import/export letter of credit via the SWIFT network (Understanding MT 700: The Documentary Credit Message [UPDATED 2025]). In practice, this means an issuing bank (the buyer’s bank) sends an MT 700 to an advising bank (the seller’s bank) to formally convey all details of the credit. This standardized electronic format ensures that all parties – banks, buyers, and sellers – clearly understand the obligations and conditions of the credit, minimizing the risk of errors or disputes (Understanding MT 700: The Documentary Credit Message [UPDATED 2025]).

Letters of credit play a vital role in trade by providing payment assurance: the buyer’s bank promises to pay the seller when specified documents (like shipping and insurance documents) are presented in compliance with agreed terms. The MT 700 message serves as the vehicle for that promise, laying out the irrevocable commitment of the issuing bank under internationally recognized rules (typically UCP 600, the Uniform Customs and Practice for Documentary Credits) (UCP 600 – Uniform Rules for Documentary Credits | ICC Knowledge 2 Go – International Chamber of Commerce). In the sections below, we’ll break down who uses MT 700 messages, why they are important, and how an MT 700 is structured – including explanations of key fields and terms such as irrevocable letter of credit, transferable credit, and mixed payment.

Contents
  1. Purpose and Usage of the MT 700 in Trade Finance
  2. Who Uses MT 700 and Why?
  3. Relationship to International Rules
  4. Structure of an MT 700 Message
  5. Format and Field Overview
  6. Key Fields and Elements in MT 700
  7. Example Scenario
  8. Conclusion

Purpose and Usage of the MT 700 in Trade Finance

Who Uses MT 700 and Why?

The MT 700 is used extensively by banks and financial institutions involved in trade finance. Specifically, an issuing bank uses it to open a documentary credit on behalf of an applicant (the buyer/importer). The message is sent through SWIFT to an advising bank in the beneficiary’s (seller/exporter’s) country (Understanding MT 700: The Documentary Credit Message [UPDATED 2025]). The advising bank then forwards the credit to the beneficiary. This electronic communication replaces or supplements a traditional paper letter of credit, ensuring that the seller has an authoritative assurance of payment under the stated terms.

The primary reason for using an MT 700 is to have a secure, standardized method of communicating credit details (Understanding MT 700: The Documentary Credit Message [UPDATED 2025]). Because all banks use the same SWIFT format, the risk of misinterpretation is greatly reduced. Every field in the message has a defined purpose and format, so there is little ambiguity. This standardization guarantees that the terms of the credit are clearly understood and agreed upon by all parties, thereby minimizing disputes or confusion (Understanding MT 700: The Documentary Credit Message [UPDATED 2025]). It also expedites the process – a bank in New York can transmit an MT 700 to a bank in Dubai within minutes, whereas a paper letter of credit might take days to courier.

From a risk management perspective, the MT 700 framework protects both buyer and seller (Understanding MT 700: The Documentary Credit Message [UPDATED 2025]). The seller (beneficiary) is assured they will receive payment if all conditions are met, because the issuing bank’s obligation is irrevocable once the credit is issued. The buyer (applicant) is likewise assured that payment will only occur when the seller fulfills the specified conditions (for example, ships the goods and presents the required documents). By using a letter of credit communicated via MT 700, both parties rely on the banks to enforce the terms: documents are checked against the terms, and discrepancies (if any) must be resolved before payment. This reduces the trust gap in international trade, where buyer and seller may not know each other well – the banks and the MT 700 act as a framework of trust.

Relationship to International Rules

Most MT 700 credits are issued subject to international standard rules, most commonly ICC (International Chamber of Commerce) rules known as UCP 600. UCP 600 (Uniform Customs and Practice for Documentary Credits, 2007 revision) is the globally recognized set of 39 articles governing letters of credit (UCP 600 – Uniform Rules for Documentary Credits | ICC Knowledge 2 Go – International Chamber of Commerce). These rules define obligations for banks and how the credit should be interpreted. The MT 700 has a field specifically for indicating the applicable rules (typically this will say “UCP 600” or “UCP latest version”). Referencing UCP 600 in the MT 700 makes the credit subject to those ICC rules by default, which is important because it standardizes practices like what constitutes a compliant document, how discrepancies are handled, etc. For more than 85 years, the UCP rules have governed letter of credit transactions worldwide (UCP 600 – Uniform Rules for Documentary Credits | ICC Knowledge 2 Go – International Chamber of Commerce). This means that when an MT 700 says the credit is subject to UCP 600, all parties know the framework of practices that apply.

Another important standard relevant to MT 700 is ISO 4217, which is the international standard for currency codes. In the MT 700, the credit amount is indicated with a three-letter currency code (like USD, EUR, GBP). These codes follow the ISO 4217 standard to avoid any confusion about currency names (ISO – ISO 4217 — Currency codes) (ISO – ISO 4217 — Currency codes). For example, “USD” represents United States Dollars, “EUR” represents Euros, and so on. Using standardized currency codes ensures clarity and reduces errors in financial communication (ISO – ISO 4217 — Currency codes). All banks worldwide recognize these codes, which is crucial when a letter of credit amount is communicated – “USD 100,000” is understood exactly the same way everywhere.

Structure of an MT 700 Message

Format and Field Overview

A SWIFT MT 700 message is highly structured. It is composed of a series of fields, each identified by a specific tag number (and letter) and each serving a particular purpose. The MT 700 covers everything from basic reference information to detailed terms of the credit. Some fields are mandatory (M) – they must appear in every MT 700 – while others are optional (O), used only if relevant (Understanding MT 700: The Documentary Credit Message [UPDATED 2025]). For example, every MT 700 must include the currency and amount of the credit (that’s mandatory), but a field for transshipment (whether goods can be moved from one vessel to another en route) is optional and only included if applicable to the shipment.

The SWIFT network enforces some validation rules on these fields to ensure consistency. For instance, certain fields must appear together or not at all, depending on the credit structure (Understanding MT 700: The Documentary Credit Message [UPDATED 2025]). An example of a network rule: if the credit is available by a time draft (meaning the seller will draw a bill of exchange that the buyer’s bank accepts for later payment), the MT 700 must include both the draft term (Field 42C: Drafts at …) and the drawee bank (Field 42a: Drawee) to make sense. Alternatively, if the credit is a deferred payment (no drafts involved, just payment at a later date) or available by negotiation, then a different field (Field 42P: Deferred Payment or Negotiation Details) is used instead of the draft-related fields (MT 700 Issue of a Documentary Credit – Page 3 – Letter of Credit Consultancy Services) (MT 700 Issue of a Documentary Credit – Page 3 – Letter of Credit Consultancy Services). The SWIFT system will reject messages that have conflicting or incorrect combinations – for example, it won’t allow both a “latest shipment date” and a “shipment period” field to be filled at the same time, since those convey overlapping information (Understanding MT 700: The Documentary Credit Message [UPDATED 2025]). These validation rules help maintain clarity: each credit’s terms should be communicated without internal contradictions.

Because letters of credit can be complex, an MT 700 message has to be concise. SWIFT messages have character limits. If the terms won’t fit into one MT 700, the issuing bank can send one or more supplementary messages (MT 701) as continuations. In such cases, Field 27 (Sequence of Total) on the MT 700 will indicate the message count (e.g. “1/2” for the first of two messages) (Understanding MT 700: The Documentary Credit Message [UPDATED 2025]). A key rule is that information should not be duplicated or contradicted between an MT 700 and its continuation MT 701 (Understanding MT 700: The Documentary Credit Message [UPDATED 2025]). Each piece of data has its place.

Below, we break down the key fields in an MT 700 and explain what each represents. Understanding these fields will clarify how the entire message conveys a complete picture of the documentary credit.

Key Fields and Elements in MT 700

Each field is labeled by a number (and sometimes a letter). Here are the most significant fields in an MT 700 message and what they mean:

  • 27 – Sequence of Total: Indicates the message sequence number out of the total, when the credit terms span multiple messages. For a single-message credit this will typically be 1/1. If an MT 701 continuation is used, this field might be 1/2, 2/2, etc., to show each part of the full LC transmission (Understanding MT 700: The Documentary Credit Message [UPDATED 2025]).
  • 40A – Form of Documentary Credit: Specifies the type of credit. In modern practice this will almost always be IRREVOCABLE (meaning it cannot be cancelled or amended unilaterally by the buyer or issuing bank). It may also say IRREVOCABLE TRANSFERABLE if the credit can be transferred to one or more third-party beneficiaries. An irrevocable letter of credit provides a definitive undertaking by the issuing bank that cannot be revoked without the beneficiary’s consent, giving the seller strong assurance of payment. A transferable credit allows the beneficiary (typically a middle-party trader) to transfer all or part of the credit to another party (secondary beneficiary), usually used when the beneficiary is not the actual supplier of the goods. If a credit is transferable, it is governed by Article 38 of UCP 600 and must be designated as such in this field. (By UCP rules, if a credit is silent on revocability, it is deemed irrevocable by default (UCP 600 – Uniform Rules for Documentary Credits | ICC Knowledge 2 Go – International Chamber of Commerce).)
  • 20 – Documentary Credit Number: The unique reference number assigned by the issuing bank to this credit (MT 700 Swift Message Field Specifications – Letter of Credit Consultancy Services). It acts as an identifier for all parties to refer to the credit. This reference is quoted in any amendments or correspondence about the credit.
  • 31C – Date of Issue: The date the letter of credit was issued (formatted as YYMMDD). This marks when the obligations under the credit become effective.
  • 40E – Applicable Rules: The code for the rules governing the credit. Typically this is UCPLATEST (indicating the ICC’s UCP 600 rules apply by default). It could also be EUCPLATEST if the credit is subject to electronic presentation rules (eUCP supplement), or in rare cases other rules like ISP (for standby letters of credit under ISP98) if an MT 700 is used for a standby credit. By specifying UCP 600 here, the credit adheres to the internationally accepted practices by the ICC (UCP 600 – Uniform Rules for Documentary Credits | ICC Knowledge 2 Go – International Chamber of Commerce).
  • 31D – Date and Place of Expiry: The last date (and location) by which the credit can be utilized. For example, 2025-12-31 NEW YORK means the credit expires on December 31, 2025 and documents must be presented in New York by that date. After this date, the issuing bank’s obligation typically ceases (unless the credit is extended or it was irrevocably committed before expiry under a complying presentation). The place of expiry is often the country of the beneficiary or the place where documents must be presented (commonly the advising or a nominated bank).
  • 50 – Applicant: The name and address of the applicant – the buyer or importer who causes the credit to be issued (Understanding MT 700: The Documentary Credit Message [UPDATED 2025]). This is the party on whose behalf the issuing bank is acting. For compliance reasons, banks ensure the applicant’s full legal name and address are stated.
  • 59 – Beneficiary: The name and address of the beneficiary – the seller or exporter who can draw on the credit (Understanding MT 700: The Documentary Credit Message [UPDATED 2025]). This is the party in whose favor the credit is issued, and who will get paid upon fulfilling the terms. As with the applicant, full name and address are listed for clarity and compliance.
  • 32B – Currency Code and Amount: The maximum amount available under the credit, and the currency, in ISO 4217 three-letter code format (Understanding MT 700: The Documentary Credit Message [UPDATED 2025]). For example, USD 100000, meaning one hundred thousand U.S. dollars (the comma in SWIFT formatting denotes the decimal point position, so , with no digits after it means no cents). This is the limit of the issuing bank’s liability. The credit might allow less to be drawn, but not more (unless there are tolerance fields – see next).
  • 39A – Percentage Credit Amount Tolerance: An optional field that specifies a tolerance as a plus/minus percentage on the amount. For instance, 10/5 could mean +10% and -5% tolerance, allowing the draw amount to be up to 10% more or 5% less than the amount in Field 32B. If no tolerance is stated, the assumption is usually that the amount is a hard maximum (with possibly a default tolerance of 5% under UCP rules for short shipments, unless otherwise specified, as per UCP 600 Art.30). 39B – Amount Specification (or Additional Amounts Covered) can further clarify if the credit covers things like freight or insurance in addition to goods value, but this field is less commonly used and appears as needed.
  • 41a – Available With… By…: This crucial field indicates how and where the beneficiary can utilize the credit. It typically includes a bank code and an availability type. For example, it might read ANY BANK IN JAPAN BY NEGOTIATION or ABC BANK TOKYO BY ACCEPTANCE. Common availability methods are:
  • By Payment – meaning at sight payment; the credit is payable immediately upon presentation of compliant documents (often indicated by “BY PAYMENT” or by the absence of a deferred term).
  • By Acceptance – meaning the beneficiary must present a time draft (Bill of Exchange) drawn, usually on the issuing bank or a nominated bank, which will be accepted and paid at maturity (e.g., 90 days after sight). If “by acceptance,” then Field 42C (Drafts at …) and Field 42a (Drawee bank) should detail the tenor of the draft and on whom it’s drawn.
  • By Deferred Payment – meaning no draft is involved, but the payment is deferred until a specified future date or period (for example, 90 days after shipment date). In this case, details go in Field 42P (Deferred Payment Details) instead of 42C/42a.
  • By Negotiation – meaning the credit is available for negotiation by any bank (or a specific bank, if stated). “Negotiation” in letter of credit terms means a bank (not necessarily the issuing bank) can advance funds (purchase the documents) before getting reimbursement from the issuing bank. If the credit is freely negotiable (available with any bank by negotiation), the beneficiary can present documents to any bank willing to act under the credit. If it’s restricted (e.g., available with a specific bank by negotiation), only that bank can negotiate. The availability field essentially tells the beneficiary how to get paid. If the field says “with issuing bank by payment”, the beneficiary will likely present documents to the issuing bank’s correspondent or branch for immediate payment at sight. If it says “with any bank by negotiation”, the beneficiary can go to their local bank to negotiate the documents. If it’s “with X Bank by acceptance”, the beneficiary will draw a time draft on X Bank, which will accept it and then pay at maturity.
  • 42C – Drafts at…: If the credit is available by acceptance or negotiation involving a draft, this field specifies the tenor of the draft. For example, 42C: 90 DAYS SIGHT means any drafts must be drawn at 90 days sight (90 days after the draft is presented and accepted) (MT 700 Issue of a Documentary Credit – Page 3 – Letter of Credit Consultancy Services). This works in tandem with 42a – Drawee, which names the bank on which the draft is to be drawn (often the issuing bank, or a specific bank if a bank other than the issuer will accept the draft). Together, 42C and 42a indicate the details of a time draft under the letter of credit. These fields are omitted for sight credits (where payment is immediate) or for deferred payment credits without drafts.
  • 42P – Negotiation/Deferred Payment Details: This field is used if the credit is available by negotiation or by deferred payment without requiring a draft (MT 700 Issue of a Documentary Credit – Page 3 – Letter of Credit Consultancy Services). It specifies the date or method for determining when payment will be made. For example, it might say “PAYABLE 90 DAYS AFTER BILL OF LADING DATE” if it’s a deferred payment credit. Only one of 42C/42a, 42P, or 42M is used in a given credit – they are mutually exclusive depending on the type of payment arrangement (MT 700 Issue of a Documentary Credit – Page 3 – Letter of Credit Consultancy Services) (MT 700 Issue of a Documentary Credit – Page 3 – Letter of Credit Consultancy Services).
  • 42M – Mixed Payment Details: This field is used for a mixed payment credit, which is a letter of credit that has more than one stage or method of payment. For instance, part of the credit amount might be payable at sight and another part payable at a later date or against different conditions. Mixed payments are relatively specialized; they are not explicitly defined in UCP 600, but banks can structure them by detailing the split in this field (Field 42M: Mixed Payment – Letter of Credit Consultancy Services). Mixed payment example: A credit might stipulate that 20% of the amount is payable upon presentation of an advance payment guarantee, 60% payable at sight upon presentation of shipping documents, and the remaining 20% payable 30 days after delivery/installation of the goods. Such complex terms would be described in Field 42M. Although mixed payments are not covered explicitly by standard LC rules, parties utilize them in practice by clearly outlining the payment schedule in the MT 700 (Field 42M: Mixed Payment – Letter of Credit Consultancy Services). This field’s content can be a narrative explanation of the payment stages.
  • 43P – Partial Shipments: Indicates whether partial shipments are allowed. The field will contain either ALLOWED or NOT ALLOWED. Partial shipments means the seller can ship the goods in multiple batches, each with its own set of documents, and receive partial payments under the credit. If the nature of the goods or the sales contract permits multiple deliveries, this field would say ALLOWED. If the buyer requires all goods in one lot (for example, a single machine that must arrive complete), it would say NOT ALLOWED.
  • 43T – Transshipment: Indicates whether transshipment is allowed. Transshipment is the act of transferring goods from one vessel (or conveyance) to another during the journey (for instance, containers being offloaded at a intermediate port and reloaded onto another ship). The field will state ALLOWED or NOT ALLOWED. This is relevant for ocean and air shipments. If a through voyage is desired (no change of vessel), transshipment would be not allowed. If it’s not critical or if direct shipments are not available, it may be allowed. (Note: In practice, containerized shipments where the container remains sealed are often not considered a harmful transshipment even if they move between vessels, but the letter of credit should clarify such details in the additional conditions if needed.)
  • 44A/E/F/B – Shipment/Delivery Locations: These fields specify the points of shipment and delivery:
  • 44A – Place of Taking in Charge/Dispatch (or Place of Receipt): For example, the inland city or port where the freight forwarder or carrier takes control of the goods from the seller.
  • 44E – Port of Loading/Airport of Departure: If the transport is by sea, 44E is the port where goods are loaded on the vessel. If by air, the airport of departure.
  • 44F – Port of Discharge/Airport of Destination: The sea port where the goods will be offloaded, or airport where the flight carrying the goods lands.
  • 44B – Place of Final Destination/For Transportation to…: The final delivery location if different from the port of discharge – for example, an inland destination or the buyer’s warehouse city. Not all of these are used in every credit; it depends on the shipping terms (Incoterms) and route. Often 44E and 44F (loading and discharge ports) are provided for FOB/CIF/CFR sea shipments, or 44A and 44B for multimodal shipments from an inland point to an inland point.
  • 44C – Latest Date of Shipment: The last allowable date of shipment of goods under the credit. For example, 2025-11-30 means the goods must be shipped on or before November 30, 2025. This date is set to ensure the seller ships in time for the buyer’s needs and also to leave enough time for documents to be presented before the credit expires. If a shipment is made after this date, it will not qualify under the credit (a discrepancy, unless an amendment is made).
  • 44D – Shipment Period: Sometimes used instead of or in addition to 44C to describe a period or schedule for shipments (e.g., “SHIP 1,000 UNITS PER MONTH OCT-DEC 2025”). According to SWIFT rules, if 44D (shipment period) is used, typically 44C (latest shipment date) might not be needed or would represent the end of the final period (Understanding MT 700: The Documentary Credit Message [UPDATED 2025]). These fields ensure all parties know the timeframe for delivery.
  • 45A – Description of Goods and/or Services: A narrative field containing the description of the goods or services being paid for under the letter of credit. This comes from the sales contract or proforma invoice. It should be detailed enough to identify the shipment (e.g., “5000 metric tons of Grade A wheat, Crop 2024, packed in 50kg bags”). Banks do not verify the quality or quantity of goods, but the description is important because the documents (like the commercial invoice) must correspond exactly to this description. Any mismatch in wording between this field and the invoice/other documents can cause a discrepancy. Clarity and consistency here are crucial.
  • 46A – Documents Required: Perhaps one of the most critical parts of the credit: this field lists all the documents the beneficiary must present to get paid. Common documents include:
  • Commercial Invoice – typically required in all LCs, evidencing the sale.
  • Transport Document – e.g., Bill of Lading for sea shipment, Air Waybill for air, CMR for road, etc., usually required as evidence of shipment.
  • Insurance Certificate/Policy – if the terms are CIF or CIP (where seller provides insurance), an insurance document must be presented.
  • Packing List – details contents of shipment.
  • Certificate of Origin – proof of goods’ origin (often needed for customs or trade agreement compliance).
  • Inspection Certificate – if an independent inspection of the goods is required by buyer.
  • Certificates – any other required certificates (phytosanitary, quality, weight, etc.). Each document is usually listed with specific conditions (for example, “Full set of 3 original clean on board Bills of Lading, made out to order of issuing bank, notify applicant, marked Freight Prepaid”). The beneficiary must provide all listed documents in the required form. This field essentially outlines the checklist the seller must satisfy to get paid.
  • 47A – Additional Conditions: Any other conditions or requirements that didn’t fall under the document list. For example, it may include clauses like “All documents must be in English,” or banking requirements such as “Bill of Lading must contain the LC number,” or commodity-specific conditions. If there are any special conditions the buyer and seller agreed on (like a warranty clause, or a certain certificate must be issued by a particular agency), they appear here.
  • 48 – Period for Presentation: Specifies the time frame in which the beneficiary must present the documents after the date of shipment. Standard under UCP 600 is 21 days after shipment unless otherwise stated (and within the credit’s validity) – this field allows the credit to modify that. For instance, it might say “within 15 days after the date of the Bill of Lading but within the validity of the credit.” This ensures documents are presented promptly; banks don’t want to be liable indefinitely waiting for documents, and buyers need to receive documents in time to claim goods.
  • 49 – Confirmation Instructions: This field tells the advising bank (or another bank) what to do about adding confirmation. It will usually have one of three codes:
  • CONFIRM – the issuing bank requests or authorizes the advising bank to add its confirmation (an additional guarantee of payment by the advising bank or a designated confirming bank, giving the beneficiary dual assurance – if the confirming bank adds its confirmation, the beneficiary can also rely on that bank for payment).
  • WITHOUT – (short for “Without Confirmation”) – the issuing bank is not asking for confirmation. The advising bank should advise the credit without adding its own guarantee. Most credits are advised without confirmation unless the beneficiary specifically requires a confirmed credit and the issuing bank agrees.
  • MAY ADD – the issuing bank is neutral or allows the advising bank to add confirmation at the advising bank’s discretion (often used when the beneficiary might request the advising bank to confirm and the issuing bank has no objection, but isn’t officially requesting it). For the beneficiary, a confirmed letter of credit provides extra security because they then have a guarantee from a local bank (the confirming bank) in addition to the foreign issuing bank. For the issuing bank and applicant, adding confirmation usually adds cost, and it implies the issuing bank’s creditworthiness might not be acceptable to the beneficiary without a stronger bank’s backup. Field 49 makes the status clear. If it says without, the beneficiary knows they only have the issuing bank’s undertaking. If confirm, they expect the advising bank (or another bank) to also undertake payment obligation.
  • 53a – Reimbursing Bank (optional): If the issuing bank has appointed a separate reimbursing bank to honor claims, that bank’s identifier is given here. A reimbursing bank is a bank (often in the exporter’s region or a major correspondent) set up to pay the claiming bank (usually the beneficiary’s or negotiating bank) on behalf of the issuing bank. The presence of this field tells the advising/negotiating bank whom to claim the funds from. In many cases, issuing banks just reimburse directly, so this field may not appear.
  • 78 – Instructions to the Paying/Accepting/Negotiating Bank: This field contains any additional instructions for the bank that is going to pay, accept drafts, or negotiate under the credit (which could be the advising bank or another nominated bank). For example, it might instruct the paying bank on how to claim reimbursement from the issuing bank (perhaps giving an account number at the reimbursing bank or stating “claim reimbursement from us after payment by SWIFT MT742”). It could also specify instructions like “Upon payment, telefax the applicant at [contact details]” or other procedural directions. Essentially, it’s a free format message from the issuer to the bank that will interact with the beneficiary for payment.
  • 57a – ‘Advise Through’ Bank (optional): If the credit needs to be advised to the beneficiary through an additional bank (maybe the beneficiary’s bank is not the one that received the MT 700 directly), this field indicates that intermediary. For instance, if the issuing bank doesn’t have a SWIFT relationship with the beneficiary’s local bank, they might send the MT 700 to a larger correspondent bank in the beneficiary’s country (advising bank), which in turn is asked to advise through the beneficiary’s own bank. Field 57a would carry the identifier of that final advising bank. This is not needed if the first advising bank is directly advising the beneficiary.
  • 71B – Charges: Details who is responsible for bank charges related to the letter of credit. It may list charges and who bears them, for example, “All banking charges outside Issuer’s country are on beneficiary’s account.” Typically, the applicant pays the issuing bank’s charges, and the beneficiary pays the advising bank’s charges, but this can vary. This field makes it explicit (e.g., “Confirmation charges are for applicant’s account” if the buyer agreed to pay for confirmation). Clear indication of charges prevents disputes over who pays which fees.
  • 72 – Sender to Receiver Information: A free-text field for additional info that doesn’t fit elsewhere in the structured fields. Importantly, this field is not part of the letter of credit terms; it’s more like a cover note between the banks. For example, the issuing bank might use Field 72 for remarks like “This MT700 is issued in substitution of a previously sent MT700 which was rejected due to technical errors” or “Please advise beneficiary by telephone on receipt.” It can also carry regulatory information, such as “This transaction is subject to XYZ regulatory compliance.” Field 72 should not contain any operative credit terms (which belong in the other fields); it’s only for extra inter-bank communication.

As we can see, the MT 700 message covers every aspect of the credit: who’s involved, what’s being sold, how much and in what currency, shipment details, how payment will happen, what documents are required, and any other conditions. Each field has a specific role in painting the full picture of the trade transaction.

Example Scenario

To tie it all together, let’s consider a brief example of an MT 700 in action:

Example: A U.S. importer (buyer) purchases machinery from a supplier (seller) in Germany for USD 500,000. The buyer asks their bank (in New York) to issue a letter of credit for the amount, payable at sight against shipping documents. The LC is to be advised through the seller’s bank in Germany. Partial shipments aren’t allowed, and the goods must be shipped by June 30, 2025 from the Port of Hamburg to the Port of New York. The credit is transferable, as the seller might use a third-party manufacturer.

In the MT 700 that the U.S. bank sends to the German bank, key fields would be populated roughly as follows:

  • 40A: IRREVOCABLE TRANSFERABLE (ensuring the credit can be transferred)
  • 32B: USD500000, (amount and currency in ISO 4217 format) (ISO – ISO 4217 — Currency codes) (ISO – ISO 4217 — Currency codes)
  • 41a: AVAILABLE WITH ANY BANK IN GERMANY BY PAYMENT (meaning the seller can go to any German bank to get paid at sight)
  • 42C/42a: (not used in this case, since it’s at sight)
  • 44E/44F: PORT OF HAMBURG / PORT OF NEW YORK (shipment from Hamburg to NYC)
  • 44C: 2025-06-30 (latest shipment date June 30, 2025)
  • 43P: NOT ALLOWED (only one shipment permitted)
  • 45A: Detailed description of the machinery, model numbers, etc.
  • 46A: List of documents (e.g., Commercial Invoice, Full set of Ocean Bills of Lading, Insurance policy, etc.)
  • 47A: Additional conditions (maybe “Certificate of Origin issued by German Chamber of Commerce” etc.)
  • 49: CONFIRM (if the seller insisted on their bank adding confirmation for extra security, the field would say confirm – otherwise it might say WITHOUT)
  • 71B: Charges details (e.g., “All banking charges outside USA for Beneficiary’s account”).

When the seller ships the goods and presents the required documents to their bank, the bank will check them against the MT 700’s terms. If everything matches (no discrepancies), the bank will pay the seller (since it’s at sight) and then claim reimbursement from the U.S. issuing bank, confident that the MT 700 represents an irrevocable undertaking. The structured format of the MT 700 ensured that both banks knew exactly what was required and there was no ambiguity in the terms.

Conclusion

The SWIFT MT 700 message is the backbone of documentary credit operations in modern banking. It provides a common language for banks to communicate the intricacies of a letter of credit, which is critical in international trade transactions. By understanding the structure of an MT 700 – from the form of the credit and applicable rules, through the parties and amounts, to the detailed conditions for shipment and payment – trade finance professionals and compliance officers can ensure that letters of credit are issued and managed correctly.

For banking professionals, precision in preparing or interpreting an MT 700 is paramount. Any mistake in these fields (even a minor typo in the goods description or an inconsistency in the data) can lead to discrepancies that delay payment or even void the credit’s assurance. Thus, banks have internal protocols and dual-control checks when issuing MT 700s to maintain accuracy and compliance. The MT 700’s standardized fields, combined with ICC rules like UCP 600, create a reliable framework that significantly reduces the risks in trade: the seller knows what to deliver and which documents to provide, and the buyer knows they’ll only have to pay when those conditions are satisfied (Understanding MT 700: The Documentary Credit Message [UPDATED 2025]).

In sum, the MT 700 is a powerful tool that marries legal principles (through international rules) with digital communication (the SWIFT network) to facilitate global commerce. Professionals dealing with letters of credit should be well-versed in MT 700 fields and their meanings. With that knowledge, they can draft credits that precisely reflect the commercial deal, and they can scrutinize incoming credits or presentations for compliance. This ensures smooth and efficient processing of documentary credits – fostering trust in international transactions and enabling goods to flow between sellers and buyers with financial security for both sides.

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