Connect & Solve
Trade Q&A
Is it the case that Egypt only accepts payments via letters of credit (L/C) and documents against payment (D/P)?
Resolved
SERVICE
TRACKING NO. 20260310 / GLOBAL Zhongshen Trade · 23+ Years of Expert Trade Agency
Trade Challenges?
No import/export license, customs delays,
or complex compliance issues.
or complex compliance issues.
Our Solution
One-stop full-chain agency: ensure efficient
clearance and fund security.
clearance and fund security.
Cost OptimizationUrgent ClearanceGlobal ResourcesCompliant Rebates
We have an Egyptian client who insists that Egyptian banks only accept letters of credit (L/C) or documents against payment (D/P), and don't support any other payment methods. Is this true? If I want to use a telegraphic transfer (T/T), is that possible?
Jason WuYears of service：10Customer Rating：5.0
International Logistics & Supply Chain ManagerStart a Chat
Egypt is not limited to using letters of credit (L/C) and documents against payment (D/P)，but it does face strict foreign exchange controls. To address foreign exchange shortages，the Central Bank of Egypt (CBE) has implemented strict regulations on non-essential imports，leading banks to generally prefer payment methods involving bank credit such as L/C and D/P. However，this does not mean T/T payments are legally prohibited. In practice，if clients can prove that the goods belong to the "essential" category (e.g。raw materials，production equipment) or provide complete foreign exchange application documents，T/T payments are feasible. The key risks include: 1) Egyptian banks are extremely strict in document review，and any non-compliance may result in payment refusal，2) the foreign exchange approval process can take 30-60 days，3) since 2023，Egypt has required all imports to pass through the "ACI" pre-registration system before customs clearance. It is recommended that you request your clients to provide a payment method confirmation letter issued by their bank and verify whether the bank is on the CBE's "Trusted Bank List" to avoid subsequent compliance risks.
Daniel XuYears of service：10Customer Rating：5.0
Director of Import & Export OperationsStart a Chat
From a logistics perspective, the core difference between L/C and D/P lies in the control of documents. Under L/C, the bank assumes the primary payment responsibility, and the documents must strictly comply with the terms of the credit letter. Even a typo could result in a payment refusal, making it suitable for high-value, customized goods. D/P involves the bank collecting payment on behalf of the client, who can only obtain the bill of lading after making payment. The risk is that the client may refuse payment, leading to the goods being stranded in the port. Egyptian port demurrage fees are extremely high—in Alexandria, daily demurrage charges can reach 0.5% of the cargo value. If the client insists on L/C or D/P, we recommend the following measures:
1. Select CIF terms, allowing you to control the freight forwarder to avoid the risk of delivery without documents;
2. Specify "acceptable third-party documents" in the L/C to prevent non-conformity issues caused by supplier problems;
3. For D/P, ensure you purchase export credit insurance and set a payment deadline of 15 days after receipt of the documents.
T/T is indeed more flexible, but shipment must wait until the client's foreign exchange quota is approved, otherwise there may be a loss of both money and goods.
Evelyn LiYears of service：3Customer Rating：5.0
Cross-border Compliance SupervisorStart a Chat
The client said "we can only accept L/C or D/P", which is usually a negotiation tactic rather than an absolute restriction. It's true that Egypt is facing foreign exchange constraints, but high-quality clients often have multiple banking channels. You could try this approach: "We understand your foreign exchange regulations, but T/T can help us reduce bank fees by 3-4%, which we can refund to you as a discount." If the client still refuses, the likely reasons are: 1) Their company's credit rating is insufficient, and the bank doesn't grant T/T credit; 2) They don't want to assume the risk of prepayment. Countermeasures: Accept L/C or D/P for the first order to build trust, and propose "if we cooperate for a year without any overdue payments, subsequent orders can be converted to 30% T/T prepayment + 70% upon receipt of the bill of lading copy." You could also suggest opening a "soft clause L/C", which allows for discrepancies in documents but still requires the bank to pay. The key is to let the client understand that you're willing to share risks, but you also need them to demonstrate good faith. Remember, Egyptian businesspeople value long-term relationships, and initial compromises lay the foundation for more favorable terms in the future.