The bank payment obligation (‘BPO’) is a new digital financial instrument intended to secure payment and facilitate finance for goods and services in the supply chain. Like the letter of credit, it relies on the banking network to transmit trade and payment information; unlike the letter of credit, however, it is based on the electronic transmission and matching of structured data on an independent transaction matching application. It thus avoids the physical examination of documents by the banks and moves payment services further in the digital era. Focusing on the legal aspects as envisaged in the Uniform Rules for Bank Payment Obligations (‘URBPO’), this chapter notes that the BPO will co-exist with the pre-existing trade methods of open account and letters of credit, and will operate best in the niche market where the trading parties have prioritised digital trade. In a wider perspective, its principles will likely inspire the further digitalisation of trade finance.
Users without a subscription are not able to see the full
to access all content.