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An international payment method that processes the collection of a draft and accompanying shipping documents through international correspondent banks.
A documentary collection is a structure under which a bank collects payment directly from a buyer (by presenting documents to the buyer).
Compared with letters of credit (LCs), documentary collections (DCs) are used for smaller transactions, and a smaller total value of transactions.
DC and LC indicative data is summarised below.
Average transaction sizes (US exports)
DCs: US$ 0.1 - 0.2 million
LCs: US$ 0.5 - 1 million
Proportion of world trade in goods
DCs: 1 - 2%
LCs: 10 - 15%
- Cash against documents
- Collecting bank
- Commercial risk
- Correspondent banking
- Cost and freight
- Documentary credit
- Documents against acceptance
- Documents against payment
- Letter of credit
- Remitting bank
- Twenty-Foot Equivalent Unit
Trade finance around the world, Centre for Economic and Policy Research, 2016