MT720 — Transfer of Documentary Credit
Transfer of a transferable documentary credit from the first beneficiary to a second. Governed by UCP 600 article 38. Classic middleman case who re-sells goods while keeping a margin.
Purpose
When an L/C is issued as "transferable" (mandatory mention), the first beneficiary can request its bank (transferring bank) to transfer all or part of the credit to one or several second beneficiaries. MT720 carries the transferred credit. The amount can be reduced (first beneficiary keeps the margin), the validity date can be brought forward, but the substantive terms (goods description, ports, documents) remain.
Block 4 tags
| Tag | Name | Status |
|---|---|---|
:40B: | Form of Doc Credit (IRREVOCABLE TRANSFERABLE) | Mandatory |
:20: | Transferred credit reference (new) | Mandatory |
:21: | Original credit reference (link) | Mandatory |
:31D: | Date and Place of Expiry (can be advanced) | Mandatory |
:50: | Applicant (first beneficiary) | Mandatory |
:59: | Beneficiary (second beneficiary) | Mandatory |
:32B: | Currency / Amount (can be reduced) | Mandatory |
:45A: | Goods Description (unchanged) | Mandatory |
:46A: | Documents Required | Mandatory |
Real-world example
HSBC Hong Kong → Bank of China Beijing transfer for Chengdu Automation, on a Jade Trading transferable initial L/C:
{1:F01HSBCHKHHXXX0000000000}{2:I720BKCHCNBJXXXXN}{4:
:27:1/1
:40B:IRREVOCABLE TRANSFERABLE
:20:LC2026TRF001
:21:LC2026MAIN001
:31C:260518
:40E:UCP LATEST VERSION
:31D:260815CHENGDU
:52A:HSBCHKHHXXX
:50:JADE TRADING LTD UNIT 1801 HARBOUR CENTRE 25 HARBOUR RD WANCHAI HK
:59:CHENGDU AUTOMATION CO LTD 88 GAOXIN AVE CHENGDU 610041 CN
:32B:USD150000,00
:39A:10/05
:41A:BKCHCNBJXXX BY DEF PAYMENT
:42C:AT SIGHT
:42A:BKCHCNBJXXX
:43P:NOT ALLOWED
:43T:ALLOWED
:44E:SHENZHEN
:44F:HONG KONG
:44C:260801
:45A:1000 PIECES AUTOMATION CONTROLLERS PN ACX-3300
:46A:+ COMMERCIAL INVOICE 3 ORIGINALS
+ PACKING LIST 3 ORIGINALS
+ B/L 3/3 ORIGINALS CLEAN ON BOARD
:47A:+ DOCUMENTS TO BE PRESENTED WITHIN 21 DAYS FROM B/L
:71B:ALL BANKING CHARGES OUTSIDE ISSUING BANK FOR ACCOUNT BENEFICIARY
:48:21
:49:WITHOUT
-}{5:{CHK:7A6B5C4D3E2F}}Common pitfalls
- L/C not transferable: if :40A: of the original L/C does not say "TRANSFERABLE", MT720 invalid.
- :32B: > original amount: the second beneficiary cannot receive more than the first — UCP 600 art. 38(g).
- :31D: later than original L/C: validity can only be shortened, never extended.
- :45A: modified: goods description must be identical to the original (UCP 600 art. 38(g) i).