Stellar Community Fund

By CashAbroad

CashAbroad Letter of Credit

SCF #21

$60.0K

Legacy v5.0 Community Award

Awarded

Do Abroad business as easily as with locals for exporting and importing businesses in LATAM. CashAbroad facilitates cross-border payments with USDC and Fiat.

Products & Services

Letter of Credit

A letter of credit is a financial instrument used in international trade to facilitate secure and reliable transactions between a buyer (importer) and a seller (exporter). It serves as a guarantee to ensure that the seller and the buyer will complete correctly the transaction and receive/make the payment. This is a required finance tool in industries such as automotive, manufacturing, maintenance, repairs, and oil & gas often need to import machinery, repair parts, chemicals, and materials.

Problem

Letters of credit can be expensive and time-consuming, requiring an intermediary bank to generate them, which takes between 3-5 days and charges up to 10% of the LC value. Additionally, not all businesses have access to these financial tools. Small and medium-sized enterprises (SMEs) that need to make international transactions face the challenge of not qualifying for such instruments and taking risks when dealing with unknown international partners. Businesses face the challenge of finding new international providers and taking on risks during financial transactions due to varying requirements and conditions.

Users

Import and export businesses around the world that require a secure payment method for both parties.

Solution with Stellar and Soroban

The CashAbroad platform will enable the exporter and importer to agree on the terms and conditions of the credit letter for the transaction. Parameters such as payment amount, delivery date, importer and exporter wallets, Incoterms, and payment policies will be taken into account. Once the agreement is reached, they will sign it, and the credit letter will be issued in Soroban. The importer will then be required to send the money, which will be stored in an escrow wallet. The exporter will receive a confirmation and proceed to produce and send the product. When the product arrives at the agreed delivery location based on the Incoterm, the status will be updated, and the payment will be received by the exporter. By implementing this solution, we will provide a secure and reliable payment method for both importers and exporters.