What Is MT700 in Banking? Fields, Parties, and UCP 600

An MT700 in banking is the standardized SWIFT message a bank uses to issue an irrevocable documentary letter of credit. It carries roughly 40 structured fields that fix every term of the credit: the amount, currency, expiry date, the documents the seller must present, the shipping route, and who pays the bank charges. Once the issuing bank sends it into the SWIFT network, the bank is committed — the seller can rely on the bank’s promise to pay rather than on the buyer’s willingness or ability to do so.¹

The message format sits in SWIFT’s Category 7 (Documentary Credits and Guarantees) and is the workhorse of international trade finance. Understanding what its fields control, who the parties are, and which rulebook governs the transaction is what turns a letter of credit from an opaque document into a working payment instrument.

What the MT700 Actually Contains

Every MT700 carries a set of mandatory fields. The message cannot leave the issuing bank without them, and each one fixes a term the seller and the examining banks will later be measured against.

Tag 20 assigns the Documentary Credit Number, the reference that every later message about this credit will cite.
Tag 40A states the Form of Documentary Credit: irrevocable, irrevocable transferable, irrevocable standby, or irrevocable transferable standby.
Tag 40E names the Applicable Rules, usually “UCP LATEST VERSION,” meaning the current UCP 600 revision.
Tag 31C is the Date of Issue.
Tag 31D sets the Date and Place of Expiry — the hard deadline and location for presenting documents. Miss it and the credit is dead.
Tag 32B gives the Currency Code and Amount.
Tag 50 identifies the Applicant (the buyer).
Tag 59 identifies the Beneficiary (the seller).
Tag 41a names the bank Available With and specifies how the credit is available.
Tag 49 tells the advising bank whether the issuing bank requests, authorizes, or prohibits confirmation.

Tag 41a is the one that decides when and how the seller actually receives money.² “By payment” means at sight: compliant documents in, funds out. “By deferred payment” means the seller waits a specified period after presentation. “By acceptance” involves the seller drawing a draft that the bank accepts, with payment due at maturity. “By negotiation” allows the nominated bank to advance funds to the seller before the issuing bank reimburses it.

Goods, Documents, and Additional Conditions

Three fields carry the substantive commercial terms banks will scrutinize when the seller presents documents.

Tag 45A describes the goods or services. This description must match the commercial invoice — not approximately, but faithfully. Banks compare documents against the credit terms at face value. A credit reading “500 metric tons of Arabica coffee beans, Grade AA” creates a discrepancy if the invoice reads “500 MT Arabica coffee, premium grade.” The specificity of Tag 45A sets the baseline the seller has to mirror.

Tag 46A lists the documents the seller must present to trigger payment: bill of lading, commercial invoice, certificate of origin, insurance policy, inspection certificate, or whatever the parties agreed. Every document named here becomes mandatory. Call for a phytosanitary certificate, and a presentation missing it will be refused.³

Tag 47A holds additional conditions that don’t fit into the goods or document fields: instructions like “all documents must be presented in English” or “the bill of lading must show freight prepaid.” Conditions placed here are as binding as anything in Tags 45A or 46A. They’re also the ones sellers most often overlook, because they sit at the bottom of the message.

Shipping Constraints and Amount Tolerances

The MT700 can lock down every leg of the shipping route and set firm deadlines on when goods leave port. Tag 44C sets the latest date of shipment. The transport document must show an on-board date on or before this deadline. Tag 44A identifies where goods are first taken in charge for multimodal transport, Tag 44E names the port of loading or airport of departure, Tag 44F specifies the port of discharge or airport of destination, and Tag 44B identifies the final delivery point.²

Tags 43P and 43T control whether partial shipments and transshipment are allowed, each using one of three codes: ALLOWED, NOT ALLOWED, or CONDITIONAL. If partial shipments are not allowed, the seller must ship the entire quantity in a single consignment. If transshipment is not allowed, the goods must travel from the port of loading to the port of discharge on the same vessel without being unloaded and reloaded at an intermediate port.³

Bulk commodity trades rarely land on an exact quantity. A vessel might load 4,980 metric tons instead of the contracted 5,000. Tag 39A handles this by specifying a percentage tolerance — a permitted variance above and below the credit amount. A tolerance of “05/05” means the seller may draw up to 5% more or 5% less than the face value without creating a discrepancy. Tag 39B sets a maximum credit amount when no upward variance is allowed, and Tag 39C covers additional amounts like freight or insurance that the credit agrees to pay on top of the goods value.² Drawing outside the permitted range is one of the easier discrepancies to avoid, and one of the more common ones in practice.

The Parties and What Each One Owes

An MT700 transaction involves two commercial parties and up to four banks, each with a distinct legal role.

Applicant and Beneficiary

The applicant is the buyer — the party that requests the credit and assumes liability for reimbursing the issuing bank once the bank pays out. The beneficiary is the seller, in whose favor the credit is issued. The beneficiary ships the goods, assembles the required documents, and presents them before expiry. Everything else in the message governs the relationship between these two parties through intermediary banks.

Issuing Bank

The issuing bank creates the MT700 and sends it into the SWIFT network. In doing so, it takes on an irrevocable obligation to pay the beneficiary (or reimburse a nominated bank that has already paid) against a complying presentation. Under UCP 600 Article 7, the issuing bank is bound from the moment it issues the credit, regardless of whether the applicant later becomes unable to reimburse it. That irrevocable commitment is the entire point of a letter of credit: the seller doesn’t have to trust the buyer, only the buyer’s bank.¹

Advising Bank

The advising bank sits in the seller’s country. It receives the MT700 and forwards it to the beneficiary after verifying that the message appears authentic. That check is important but limited: the advising bank confirms the message genuinely came from the issuing bank through SWIFT’s cryptographic protocols. It takes on no obligation to pay. If the authentication checks out, its job is to deliver the message to the seller accurately.

Confirming Bank

When the seller doesn’t trust the issuing bank — perhaps because the bank sits in a country with political instability or weak banking regulation — the seller can request that another bank add its confirmation. A confirming bank takes on its own independent obligation to pay against a complying presentation, separate from and in addition to the issuing bank’s undertaking. This is a fundamentally different role from advising. The confirming bank must honor a complying presentation without recourse, even if the issuing bank later disagrees with the compliance determination or becomes unable to reimburse.⁴

Tag 49 tells the advising bank whether the issuing bank requests confirmation, merely authorizes it, or prohibits it. Where issuing-bank country risk is real, sellers should push for confirmation in the sales contract; the added fee is usually worthwhile against the exposure.

Reimbursing Bank

Not every MT700 names a reimbursing bank, but when the issuing bank and the paying bank don’t share a direct account in the credit’s currency, one is needed. Field 53a identifies the reimbursing bank — the institution authorized by the issuing bank to fund the paying bank’s claim. If Field 53a is absent and a single direct account relationship in the credit currency exists between the issuing and advising banks, that account is used automatically.²

The Rulebook: UCP 600

The Uniform Customs and Practice for Documentary Credits, published by the International Chamber of Commerce, has governed letter of credit transactions since 1933. The current revision, UCP 600, took effect in 2007. When Tag 40E in an MT700 reads “UCP LATEST VERSION,” every bank in the chain applies these rules to interpret the credit’s terms and examine documents.¹

The Five-Banking-Day Examination Window

Under UCP 600 Article 14, a bank receiving documents has a maximum of five banking days following the day of presentation to determine whether the documents comply. This replaced the vague “reasonable time” standard in the previous revision. During those five days, the bank checks every document against the credit terms, against each other, and against the applicable standards. If it decides the documents comply, it must honor. If it finds discrepancies, it must issue a refusal notice within that same five-day window; miss it and the bank loses the right to claim non-compliance.¹

Under UCP 600 Article 16, that refusal must be a single notice to the presenter, sent by telecommunication, listing each discrepancy and stating what the bank intends to do with the documents. A bank that bungles or delays this notice may be forced to pay against otherwise-discrepant documents. Sellers should read any refusal notice carefully, check that it was sent within the five-day window, and verify that each listed discrepancy is legitimate.

Strict Compliance and What It Actually Means

Banks examine documents under a principle called “strict compliance,” though UCP 600 never uses that phrase. The concept comes from case law, most famously a 1927 English decision holding that there is “no room for documents which are almost the same, or which will do just as well.” In practice, strict compliance does not mean character-by-character matching. UCP 600 sub-article 14(d) says data in a document need not be identical to the data in the credit; it just must not conflict with it. A minor misspelling that doesn’t change the meaning of a word is not a discrepancy under current banking practice.⁵

Writing “Shenzhen” on the invoice and “Shenzen” on the certificate of origin is unlikely to trigger a refusal. Listing the goods as “polyester fabric” when the credit says “cotton fabric” will, because that conflicts with the credit terms rather than merely misspelling them. The line between harmless typo and material conflict is where most disputes sit.

ISBP: The Practical Companion

The ICC also publishes the International Standard Banking Practice, a companion document that bridges UCP 600’s general principles and the day-to-day work of examining invoices, transport documents, and insurance certificates. ISBP doesn’t amend UCP 600; it guides how document checkers should apply UCP 600 rules to specific situations. Following ISBP helps reduce first-presentation rejections, which by ICC estimates run between 60% and 75% of presentations worldwide.⁶

Amending the Credit With an MT707

Trade deals change. Shipment dates slip, quantities adjust, or the parties agree to modify document requirements. When the terms of an existing MT700 need to change, the issuing bank sends an MT707 through the same SWIFT channel to the advising bank. Field 23 links it back to the original credit, Field 26E numbers each amendment in sequence, and Field 30 records the effective date. If the amendment changes the beneficiary, the new party is specified in Field 59.⁷

One detail catches people off guard: under UCP 600, an amendment does not take effect until the beneficiary accepts it. Silence alone is not acceptance. The beneficiary can reject an amendment and continue operating under the original credit terms. This matters when the applicant tries to reduce the credit amount or shorten the shipment deadline; the seller is not forced to agree. Field 71N in the MT707 specifies who pays the amendment charge, using codes APPL, BENE, or OTHR.²

Fees and Who Pays Them

Letters of credit generate fees at several points, and the allocation is negotiable. Field 71D specifies charges, and in practice the arrangement follows one of three patterns: the applicant bears all charges (“OUR”), the beneficiary bears all charges (“BEN”), or the parties share them, each paying the fees of their own bank (“SHA”).

The main categories include issuance fees charged by the issuing bank (often a percentage of the credit amount), advising fees from the advising bank, and confirmation fees when a confirming bank adds its guarantee. Every amendment triggers a separate fee, and every discrepancy the bank identifies generates a discrepancy handling charge. Individual charges may look modest, but they compound quickly on a transaction that needs multiple amendments and repeated presentations. A credit structured as “BEN” can take a noticeable bite out of the proceeds on smaller trades, so sellers should negotiate the allocation in the sales contract before the credit is issued.

Force Majeure: A Risk the MT700 Doesn’t Cover

UCP 600 Article 36 addresses what happens when a bank’s operations are disrupted by events beyond its control: wars, natural disasters, civil unrest, strikes, or terrorism. During such an interruption, the bank assumes no liability for the consequences. More importantly for sellers, if a credit expires while the bank is shut down due to a force majeure event, the bank will not honor or negotiate under that credit once it resumes. The credit simply dies. This creates real exposure for sellers dealing into unstable regions, and it’s a risk that confirmation from a bank in a stable jurisdiction can partially offset.

1
International Chamber of Commerce. ICC’s New Rules on Documentary Credits Now Available
2
SWIFT. Category 7 – Documentary Credits and Guarantees for Standards MT
3
Wells Fargo. SWIFT 2018 MT 700 Series Standards Release Guide
4
ICC Austria. ICC Banking Commission Technical Advisory Briefing No. 13 – Confirmation of a Documentary Credit Under UCP 600
5
International Chamber of Commerce. Notes on the Principle of Strict Compliance
6
ICC Academy. ISBP for Practitioners – Applying ICC’s Banking Standards
7
SWIFT Knowledge Centre. MT707 Amendment to a Documentary Credit