Chap 0,1, - Introduction, Overview PDF

8/9/2022
TRƯỜNG ĐẠI HỌC THỦ DẦU MỘT
CHAPTER 0:
INTRODUCTION TO
INTERNATIONAL PAYMENTS
THU DAU MOT Subject: International Payments

09/08/2022 International Payments
UNIVERSITY Lecturer:
The international payments course equips students with

knowledge of:
➢ Role and necessity of international payment methods in the
context of globalization and economic integration;
➢ Conditions of international payments: International sales
contracts, Commercial documents, payment instruments and
international payment methods;
➢ The procedures/processes and risks of participants in
payment methods;

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1. International payments textbook, (2013), Assoc. Prof. Dr. Le

Phan Dieu Thao et al., Banking University Publishing House.
2. International payments textbook, (2014), Assoc. Prof. Dr.
Tran Hoang Ngan et al., UEH Publishing House.

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1
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[1] Law and International conventions :

- United Nation Convention On Contracts for The International
Sale of Goods (CISG 1980)
- Uniform Law for Bill of Exchange and promissory Note- ULB
- Uniform Law for Check/Cheque
- WTO/Free Trade Agreements

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[2] International practice and rules:

- International Commercial Terms (Incoterms)
- Uniform customs and practice for documentary credit (UCP
600 2007, ISBP 681 2007 and eUCP 1.1 2007).
- Uniform Rules for Collection - URC 522, 1995
- The Uniform Rules for Bank to Bank Reimbursement under
Documentary credit- URR 725, ICC”.

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[3] Law of Vietnam:

- Law No. 49/2005/QH11 of November 29,2005, on
Negotiable instruments.
- Ordinance No. 28/2005/PL-UBTVQH11 of December
13th, 2005, on foreign exchange control.
- Circular guiding the foreign exchange management:
o 12/2016/TT-NHNN
o 03/2016/TT-NHNN
o 05/2016/TT-NHNN

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2
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INTERNATIONAL PAYMENTS (2+1 CREDITS) : 60 HOURS
1. Overview of international payments

2. International commercial terms and sales contract
3. Commercial documents in international payments
4. Financial documents in international payments
5. Remittance method / Transfer method
6. Collection method
7. Documentary credit method
8. Others: CAD, open account

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The students will be evaluated on the basis of their

performance as follows:
(1) Course assessment: 50%

Attendance : 10 20%
The mid-term assessment: 10 60%
Group battles : 10 20%
Bonus-point : 10 10%
(2) The final test: 50%
TOTAL 10

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✓ Each group will have 3 or 4 members.

✓ There are 16 groups => 2 groups for each topic.
✓ Each group has to organize some activities such as games,
video clips, singing a song, … to explain the meaning of all
new vocabularies in the topic (1-8).
✓ 2 groups/topic have to submit their performances for
teacher to choose the better one.
✓ The better group will be selected to present in the class and
receive rewards of “group battles”.

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1. International commercial terms (Chapter 2)

2. International sale contracts (Chapter 2)
3. Commercial documents (Chapter 3)
4. Financial documents (Chapter 4)
5. Remittance method (Chapter 5)
6. Collection method (Chapter 6)
7. Documentary credit method (Chapter 7)
8. Others: CAD, open account (Chapter 8)

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CHAPTER 1:
OVERVIEW OF
INTERNATIONAL PAYMENTS

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Definition and role of International payments

1
Characteristics of International payments

2
Legal terms
3
Parties involved in international payments

4
Conditions of international payments

5
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4
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1
1.1 Definition
International payment is the payment of monetary obligations

arising between organizations, companies and other entities
from different countries.

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1
1.2 Characteristics of International Trade
Domestic trade International trade
Takes places The different regions Two different countries or
between of the same country one country and the rest of
the world
Language and Usually speak same Communication challenges
cultural barriers language and practice due to language and
same culture cultural barriers
Mobility of Free Quite restricted
factors of
production
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1.2 Characteristics of International Trade

Domestic trade International trade
Currency Single currency Multiple currencies
Customs Duties and Easier to move goods Restricted due to
trade barriers without much complicated custom
restrictions. procedures and trade
barriers like tariff,
quotas or embargo
Transportation Costs Less transportation cost
and Risks and Less transport risks
Politics, regulations The same in a country Difference among
and laws vary by countries
country
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5
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1.3 The role of international payment methods
✓ The increasing globalisation of the world has resulted in

greater demand for international payments.
✓ Facilitating import and export activities.
✓ Increasing the bank's income, extending capital, diversifying
bank’s services, enhancing the bank's reputation in the
international financial market.
✓ In terms of state management, the International payment
operations helps to concentrate and manage foreign currency
sources in the country and use foreign currencies effectively.

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Characteristics of International payments

2
✓International payment operations take place globally,

through the world banking network.
✓Belonging to foreign exchange and conversion methods,
exchange rates, etc.
✓Currency in international payments is not usually cash but
it exists as means of payment
✓High risks and high consequences
✓Complying with the specific conditions of international
laws, conventions, rules and practices

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Legal terms
3
[1] Law and International conventions :

- United Nation Convention On Contracts for The International
Sale of Goods (CISG 1980)
- Uniform Law for Bill of Exchange and promissory Note- ULB
- Uniform Law for Check
- WTO/Free Trade Agreements

09/08/2022
6
8/9/2022
Legal terms
3
[2] International practice and rules:

- International Commercial Terms (Incoterms)
- Uniform customs and practice for documentary credit (UCP
600 2007, ISBP 681 2007 and eUCP 1.1 2007).
- Uniform Rules for Collection - URC 522, 1995
- The Uniform Rules for Bank to Bank Reimbursement under
Documentary credit- URR 725, ICC.

09/08/2022
Legal terms
3
[3] Law of Vietnam:

- Law No. 49/2005/QH11 of November 29,2005, on
Negotiable instruments.
- Ordinance No. 28/2005/PL-UBTVQH11 of December
13th, 2005, on foreign exchange control.
- Circular guiding the foreign exchange management:
o 12/2016/TT-NHNN
o 03/2016/TT-NHNN
o 05/2016/TT-NHNN

09/08/2022

4
✓Import and export enterprises
✓Central Bank
✓Commercial bank
✓Carriers, Forwarders, Logistics companies
✓Insurance Companies
✓Authorities of governments

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7
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4
Role of Commercial banks/ Correspondent Banks
➢ Correspondent Banks: A bank that performs certain operations

on behalf of another bank, usually in a different country.
➢ Correspondent banks hold deposits with each other, and accept
and collect items on a reciprocal basis. It is through networks of
correspondent banks that trade banks are able to service and
support international business transactions.

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4
Commercial banks/ Correspondent Banks
NOSTRO AND VOSTRO ACCOUNT
➢ The accounts held between correspondent banks and the
banks to which they are providing services are referred to as
Nostro and Vostro accounts.
•An account held by one bank for another is referred to by
the holding bank as a Nostro account or Our account.
•The same account is referred as a Vostro account or
Your/Their account by the counterparty bank.
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4
Role of Commercial banks/ Correspondent Banks
• Clearing service
• Trade finance
• Syndicated loan
• Treasury Services
• Advisory Services

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4
Information system between correspondent banks
The Society for Worldwide Interbank Financial

Telecommunication (SWIFT) provides a network that
enables financial institutions worldwide to send and
receive information about financial transactions in a
secure, standardized and reliable environment.

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4
The Clearing House Interbank Payments

System (CHIPS) is a United States private clearing
house for large-value transactions.

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4
The Clearing House Automated Payment System or CHAPS is

a British payment system
Others: FEDwire, ACH, BOJNET, TBF ,…

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9
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Conditions of international payments

5
➢ Incoterms & International Sales contract : Chapter 2

➢ Commercial documents : Chapter 3
➢ Payment terms:
• Financial documents : Chapter 4
• Payment methods: Chapter 5,6,7,8

09/08/2022
10

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8/9/2022

TRƯỜNG ĐẠI HỌC THỦ DẦU MỘT

THU DAU MOT Subject: International Payments

TRƯỜNG ĐẠI HỌC THỦ DẦU MỘT

The international payments course equips students with

THU DAU MOT Subject: International Payments

TRƯỜNG ĐẠI HỌC THỦ DẦU MỘT

1. International payments textbook, (2013), Assoc. Prof. Dr. Le

THU DAU MOT Subject: International Payments

TRƯỜNG ĐẠI HỌC THỦ DẦU MỘT

[1] Law and International conventions :

THU DAU MOT Subject: International Payments

TRƯỜNG ĐẠI HỌC THỦ DẦU MỘT

[2] International practice and rules:

THU DAU MOT Subject: International Payments

TRƯỜNG ĐẠI HỌC THỦ DẦU MỘT

[3] Law of Vietnam:

THU DAU MOT Subject: International Payments

TRƯỜNG ĐẠI HỌC THỦ DẦU MỘT

INTERNATIONAL PAYMENTS (2+1 CREDITS) : 60 HOURS

1. Overview of international payments

THU DAU MOT Subject: International Payments

TRƯỜNG ĐẠI HỌC THỦ DẦU MỘT

The students will be evaluated on the basis of their

(1) Course assessment: 50%

THU DAU MOT Subject: International Payments

TRƯỜNG ĐẠI HỌC THỦ DẦU MỘT

✓ Each group will have 3 or 4 members.

THU DAU MOT Subject: International Payments

TRƯỜNG ĐẠI HỌC THỦ DẦU MỘT

1. International commercial terms (Chapter 2)

THU DAU MOT Subject: International Payments

TRƯỜNG ĐẠI HỌC THỦ DẦU MỘT

THU DAU MOT Subject: International Payments

TRƯỜNG ĐẠI HỌC THỦ DẦU MỘT

Definition and role of International payments

Characteristics of International payments

Parties involved in international payments

Conditions of international payments

TRƯỜNG ĐẠI HỌC THỦ DẦU MỘT

Definition and role of International payments

International payment is the payment of monetary obligations

THU DAU MOT Subject: International Payments

TRƯỜNG ĐẠI HỌC THỦ DẦU MỘT

Definition and role of International payments

TRƯỜNG ĐẠI HỌC THỦ DẦU MỘT

1.2 Characteristics of International Trade

TRƯỜNG ĐẠI HỌC THỦ DẦU MỘT

1.3 The role of international payment methods

✓ The increasing globalisation of the world has resulted in

THU DAU MOT Subject: International Payments

TRƯỜNG ĐẠI HỌC THỦ DẦU MỘT

Characteristics of International payments

✓International payment operations take place globally,

THU DAU MOT Subject: International Payments

TRƯỜNG ĐẠI HỌC THỦ DẦU MỘT

[1] Law and International conventions :

THU DAU MOT Subject: International Payments

TRƯỜNG ĐẠI HỌC THỦ DẦU MỘT

[2] International practice and rules:

THU DAU MOT Subject: International Payments

TRƯỜNG ĐẠI HỌC THỦ DẦU MỘT