Letters of credit are popular among traders because it reduces the risk of non-shipment.

Question

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Letters of Credit (LCs) ensure that the seller receives payment from the buyer only if the seller meets the specified conditions like documents, quantity, quality, and time. As the payment is guaranteed, there is a lower risk of non-shipment or default. Hence, LCs are popular among traders who deal with international trade.

Letters of Credit Are Popular Among Traders Because It Reduces