International
Settlement
L/O/G/O
Chapter three Remittance
• International exchange国际汇兑
• Reimbursement of remittance cover汇
款头寸的偿付
• The concept of remittance
• Parties of remittance
• Methods and procedures of remittance
• Application of remittance
International exchange
•
International exchange refers to operational activities
related with the currency conversion and transfer of funds
between countries in order to settle the claims and debts by
payment instruments through banks.
In broad sense--the international settlement
In narrow sense--international bank remittance
• Types:
Remittance:
payer
Bank A
Reverse remittance:
contract
payee
payer
Bank B
Bank A
contract
payee
Bank B
Reimbursement of remittance cover
• If the paying bank maintains a current account with the
remitting bank(1) or the remitting bank has a a/c with the
paying bank(2)
Vostro a/c
(1)in cover,we have credited
you’re a/c with us
Remitting bank (2)in cover,please debit our a/c
with you
Paying bank
Nostro a/c
If there is no vostro or nostro account with each other,but the
remitting bank can find a third bank,with which both the paying bank
and the remitting bank maintain current account.
In cover, we have authorized A to debit our a/c
and credit your a/c with them
Remitting
bank
debit our a/c and Reimbursing Credit advice
credit paying
bank A
bank a/c with you
Paying bank
Exercises:
please write “cover instruction” for each remittance below.
a. The paying bank has maintained an USD account with the
remitting bank. Suppose an outward remittance in USD is
made, how do you write “cover instruction” for this
remittance?
In cover, we have credited your account with us
b. Both remitting bank and paying bank have maintained USD
account with XYZ Bank, New York. Suppose an outward in
USD is made, then “cover instruction” ?
In cover, we have authorized XYZ Bank, New York to debit
our account and credit your account with them
the concept of remittance
•
A bank, at request of its customer, transfer a
certain sum of money to its overseas branch or
correspondent bank, instructing it to pay a named
person domiciled in that country.
• Based on commercial credit
payee
goods
①Application
③ paying
Paying
bank
remitter
② instruction
Remitting
bank
parties and their obligations
• 汇款人（remitter/importer）:
 Remittance application
 Submit the same amount of funds and commission
 For our country, submit documents required by SAFE
• 收款人或受益人（payee/exporter）
• 汇出行(remitting bank)：

payment order/P.O. （支付授权书)should be made out as
instructed in the application and indicate the reimbursement of
remittance cover ;

outward remittance
• 汇入行或解付行（paying bank）：

paying in strict compliance with the P.O. and authenticate the
relevant signature or test key ;

usually paying after its receipt of the funds from the remitting
bank;

clean payment;

inward remittance
Methods and procedures of remittance
Based on the means of transferring funds,
• 电汇（telegraphic transfer, T/T）
the remitting bank sends the P.O. to the paying bank by cable, telex,
or SWIFT, authorizing the paying bank to make payment to the payee.
fast ; safe ; limited time for banks to keep the funds
the contents of T/T
• 信汇（mail transfer，M/T）
the remitting bank transfers the funds by mailing a P.O.
cheap but slow
procedures for M/T and T/T
• 票汇（remittance by banker’s demand draft, D/D）
On the request of the remitter, the remitting bank draws a demand
draft on its overseas branch or correspondent bank ordering the latter
to pay on demand to the payee upon presentation.
convenient and transferable
draft on center中心汇票
procedures for D/D
The contents of T/T
FM:汇出行
TO:汇入行
DATE:发电日期
TEST密押
OUR REF NO.汇款编号
NO CHARGES FOR US 我行不负担费用
PAY(AMT) 金额VALUE (DATE)起息日 TO(BENEFICIARY)收款人
MESSAGE附言
ORDER/BY ORDER OF (B/O)汇款人
COVER头寸拨付
收款人：
PAY TO BANK （收款人的帐户行）FOR CREDITING A/C
NO. OF 收款人
Remitting bank: bank of Asia, Tianjin
Paying bank：bank of Asia,
Luxemburg
Date of cable: 9 June Test:2563
Ref No.208TT0219
Amount:USD 1,660.00
Payee:Marie Clauda
Dumont,Luxemburg
account No.0-164/7295/550
with
Banque International du
Luxemburg
Message:payroll
Remitter:Crystal Palace Hotel,Tianjin
Cover:Debit our H.O. account
FM: bank of Asia, Tianjin
TO: bank of Asia, Luxemburg
DATE: 9 June
TEST 2563 OUR REF208TT0219
NO ANY CHARGES FOR US
PAY USD 1,660.00
TO Banque International du Luxemburg
FOR CREDITING A/C NO. 0164/7295/550
OF Marie Clauda Dumont,Luxemburg
MESSAGE payroll
ORDER Crystal Palace Hotel,Tianjin
COVER Debit our H.O. account
(8)
payee
remitter
(1)
(2)
Remitting
bank
(3)
(7)
(4)
(5)
(6)
Paying
bank
(1)Remittance application with funds and commission;
(2)receipt
(3)sends P.O. /telex/SWIFT instructing paying bank to make payment
(4)after authenticating, notifies the payee
(5)upon receipt, the payee provides the paying bank a receipt
(6)the paying bank debited the remitting bank’s a/c and make payment
(7)sends the debit advice and payment receipt from payee to the remitting bank
(8)the debt is discharged
remitter
1) D/D
application
2)Bank demand
draft
Remitting
bank
payee
3)bank demand
draft
4)Presenting
6)Debit advice
5)payment
Paying
bank
Collecting
bank
Draft on center
• 银行开出的以票面货币清算中心城市的银行为付款行
的汇票。
• 出票行：汇出行
付款行：清算中心的代理行
• 特点：
购票人将中心汇票交收款人，收款人可委托当地银行
托收或买入，还可转让。
汇出行不寄票根，不拨头寸，当中心汇票提交付款行
时，借记出票行的帐户以付款并向其寄送借记报单。
从出票到付款前不占用出票行的资金。
Application of remittance
• According to the time of shipment and of payment :
 预付货款(payment in advance) :pay at the time of
order(cash with order) or prior to shipment of the goods,
commonly used in specialized and capital intensive goods.
 货到付款（payment after arrival of goods :also called open
account, say, cash on delivery/交货付现。
goods sold（售定）
sold on consignment（寄售）
 凭单付汇(remittance against documents)
• Characteristics of remittance
 risky
 Unbalanced capital burden
 Simple procedures and cost-efficient
Case study
出口合同规定的支付条款为装运月前15天电汇付款，买方
延至装运中始从邮局寄来银行汇票一纸，为保证按期交货，出口
企业于收到该汇票次日即将货物托运，同时委托银行代收票款。
一个月后，接银行通知，因该汇票系伪造，已被退票。此时，货
已抵达目的港，并已被买方凭出口企业自行寄去的单据提走。事
后追偿，对方早已人去楼空。
结论：1、进口方改变了付款方式
2、收到汇票并不等于收到钱，当企业无法辨别其真伪
时，应交银行代为审核