4/15/2023

Chapter 1
OVERVIEW OF
INTERNATIONAL PAYMENT

OVERVIEW OF INTERNATIONAL PAYMENT

* Objective: To help learners:

• Present the concept and role of
international payment.
• Recognize the risks involved in
international payment activities.
• List some laws and practices regulating
international payment activities.
• Outline the basic features of
correspondent banking. ngân hàng đại lí
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OVERVIEW OF INTERNATIONAL PAYMENT

* Content:
1.1. Definition and role of international
payment.
1.2. Risks in international payment.
1.3. Legal framework for regulating
international payment activities.
1.4. Correspondent banking. 3

mậu dịch (xuất nhập khẩu/ngoại thương F

trade/thương mại quốc tế I trade)
, phi mậu dịch (kiều hối, du lịch, du học, chữa
bệnh, ….)

1.1.1. DEFINITION OF INTERNATIONAL PAYMENT

International payment is the performance of

nghĩa vụ tiền tệ monetary obligations arising from trading
and non-trading activities between
individuals, organizations in one country
vay và trả nợ
and individuals, organizations in another
country, or between a country and
international organizations through the
banking system.
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1.1. Definition and role of international

payment
Non trading Foreign trade
activities activities Subject B
Subject A
(Nation A) (Nation B)
Monetary obligations

International Payment

International Payment in
What Foreign Trade
role do Buyer and seller’s agreement c2
banks Currency, value , payment time c3
play? Payment documents c4 (chứng từ tm
Payment methods commercial doc)
3 chương cuối 5
(chuyển tiền, nhờ thu, tín dụng chứng từ)
banking system: trung gian thanh toán
(payment intermediary)

1.1.2. ROLE OF INTERNATIONAL PAYMENT

* For the economy: chuyên môn hoá thông qua

xuất-nhập khẩu
- International trade activities: promoting the
globalization of all countries in the world.

- International investment activities: enhancing the

speed of capital movement across the world.
luân chuyển vốn giữa các quốc gia
- Other international activities (the exchange of
(viện trợ)
human resources, culture, education, healthcare):
contributing to the development of these activities.
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1.1.2. ROLE OF INTERNATIONAL PAYMENT

* For banking system:

- Bringing profit to banks with relatively low
risk. Banks: k bỏ vốn, chỉ thu phí qua giao dịch 2 bên
- Supporting the development of other banking
services such as forex
ngoại trading,
hối foreign trade
financing, bank guaranteeing, investing...
2 chiều, hổ trợ phát triển cho nhau
- Contributing to improve the banks’
competitiveness.
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1.2. RISKS IN INTERNATIONAL PAYMENT

International payment (IP) in foreign trade has

specific characteristics for both buying and selling
parties:
- Different country → Country risk
- Different payment currency → Forex risk
- Different language, culture, customs, space and
time → unclear understanding of the partner →
Partner risk/ Counterparty risk rr đối tác
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1.2. RISKS IN INTERNATIONAL PAYMENT

1.2.1. Country risk: The ability which a country or

a debtor in a country wants but cannot fulfill its
obligations to foreign partners. It is included:
muốn nhưng k thể thực hiện nghĩa vụ tiền tệ
- Political risk: war, civil riot, embargo…
- Legal risk: changes in the law of a country may
affect the international payment obligations of
related parties.
- Economic risk: the economic situation of a country
affects international payment activities.
nội ngoại tệ thay đổi giá…. 9

1.2. RISKS IN INTERNATIONAL PAYMENT

1.2.2. Forex risk: including:

rr tỉ giá
- Exchange rate risk: Changes in exchange rate
affect the value of exports and imports denominated
in domestic currency, then impacting on business
results.
- Forex management risk: Government policies on
forex management, that change for facilitating or
khơi thông, dễ dàng hơn
limiting the forex inflow or outflow in a country, can
affect international payment activities.
10
hoặc hạn chế do chính sách quản lí ngoại hối

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1.2. RISKS IN INTERNATIONAL PAYMENT

1.2.3. Counterparty risk: including:

- Risk from importers: importers may not receive goods,
delay payment or not make payment at all…
- Risk from exporters: exporters may not deliver goods or
deliver goods that do not meet contractual specifications
regarding features, quality, and quantity…
- Risk from banks : operational risk (IT system, transaction
processes, staff’s mistakes or fraud…), risk from
correspondent banks.
1.2.4. Other risks: natural disasters, fires, strikes …
đình công 11

1.3. LEGAL FRAMEWORK FOR

INTERNATIONAL PAYMENT ACTIVITIES
1.3.1. International legal framework:
* Uniform Customs and Practice for Documentary Credit - UCP
(Quy tắc và thực hành thống nhất về tín dụng chứng từ):
- Document is issued by the International Chamber of
Commerce - ICC (Phòng Thương Mại Quốc Tế).
tổ chức phi chính phủ (tư nhân) do các quốc gia lập ra
- There are versions of UCP 82 (1933), UCP 151 (1951), UCP
222 (1962), UCP 290 (1974), UCP 400 (1983), UCP 500
(1993) and the latest, most complete and most widely used
ICC hổ trợ UCP version is UCP 600 (2007), effective from Jul. 01, 2007. chứng từ giấy
do k bao hàm hết
các tình huống - It is supported by relevant documents issued by the ICC:
-> eUCP (chứng eUCP 1.0 (2002), eUCP 1.1. (2007) and eUCP 2.0 (2019);
từ bằng điện tử) ISBP (latest version ISBP 745 issued in 2013). 12
dùng để kiểm tra chứng từ

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1.3. LEGAL FRAMEWORK FOR

INTERNATIONAL PAYMENT ACTIVITIES
1.3.1. International legal framework:
* Uniform Rules for Collection – URC (Quy tắc thống
nhất về nhờ thu): cũng do ICC ban hành
- The URC was first issued by the ICC as URC (1956),
then revised with versions of URC 254 (1967), URC 322
(1978) and the latest version, which is now widely used,
phương thức thanh toán nhờ thu
is URC 522 (1995), effective from Jan. 01, 1996.-> phải tuân theo
- eURC 1.0 was issued by the ICC in May, 2019.
- URC helps all parties to agree on basic principles in
the payment method of collection.
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1.3. LEGAL FRAMEWORK FOR

INTERNATIONAL PAYMENT ACTIVITIES
1.3.1. International legal framework:

tài liệu k thể * Uniform Rule for Reimbursement under Documentary

thiếu trong Credit - URR (Quy tắc thống nhất về hoàn trả liên hàng theo
bộ phận tín dụng chứng từ): giữa các ngân hàng -> Chỉ ngân hàng quan tâm
thanh toán - URR is a supporting document for UCP, issued by ICC and
quốc tế của has two versions: URR 525 (1995), effective from Jul. 01,
BANKs 1996 and the latest version is URR 725 (2008), effective
from Oct. 01, 2008.
- URR presents the rules for performing reimbursement
transactions between banks in the method of documentary
credit, thus it is an indispensable document for commercial
banks. 14

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1.3. LEGAL FRAMEWORK FOR

INTERNATIONAL PAYMENT ACTIVITIES
1.3.1. International legal framework:
* Uniform Law for Bills of Exchange and Promissory Notes –
Geneve Convention 1930 – ULB 1930 (Công ước Geneve
1930 về Luật hối phiếu và lệnh phiếu thống nhất):
- ULB was established under the Geneva Convention in
1930 with the participation of 22 countries.
- ULB 1930 serves as a basis for the member countries and
many other countries to refer in order to enact their own law
of Bill of Exchange.
- England and the United States did not participate in this
Convention and have their own bill of exchange law: England
has the Bill of Exchange Act in 1882; the United States has
the Uniform Commercial Code (UCC) in 1952. 15

Anh - Mỹ đã phát triễn trc nên có luật riêng

1.3. LEGAL FRAMEWORK FOR

INTERNATIONAL PAYMENT ACTIVITIES
1.3.1. International legal framework:
* Uniform Law on Cheques – Geneve Convention 1931 –
ULC 1931 (Công ước Geneve 1931 về Luật séc thống nhất):
- The ULC was established under the Geneva Convention in
1931 with the participation of 30 countries.
- The ULC 1931 is a basis for member countries and many
other countries to refer in order to enact their own country's
cheque laws.
- England and the United States have their own cheque laws:
The Cheques Act of England issued in 1957 and the Uniform
Commercial Code (UCC) of the United States issued in
1952. được thay thể bằng thẻ thanh toán -> k phổ biến nx
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1.3. LEGAL FRAMEWORK FOR

INTERNATIONAL PAYMENT ACTIVITIES
1.3.2. Domestic legal framework:
- Commercial Law: enacted in 2005, effective from Jan. 01,
2006, regulates commercial activities both within and outside
of Vietnam.
- Law on Negotiable Instruments: enacted in 2005 based
on the ULB 1930 and the ULC 1931, effective from Jul.
01,2006, regulates transactions related to bills of exchange,
promissory notes and checks. đọc ULB thôi cx dc
- Ordinance of Foreign Exchange: enacted in 2005, pháp lệnh ngoại hối
effective from Jun. 01, 2006, manages and regulates forex
activities in Vietnam. The forex Ordinance was amended and
thêm cái này ms đủ supplemented in 2013 and the amendment and supplement
came into effect on Jan. 01, 2014. 17

1.3. LEGAL FRAMEWORK FOR

INTERNATIONAL PAYMENT ACTIVITIES
* Note: công ước - luật quốc tế (ULB 1930, ULC 1931…)
-> mandotary legal nature: t chât pháp lí bắt buộc
- International conventions and laws have the mandatory
legal nature. Meanwhile, international rules and customs sử dụng cái được
have the discretionary legal nature, specifically shown: ban hành cúi cùng,
+ They must be referred to in relevant agreements to be mấy cái trước sẽ bỏ
applied.
+ They can be modified, added to, omitted, or applied
differently one or some provisions.
+ All versions of the rules and customs remain valid and
have equal validity.
- Decreasing hierarchy of legal value: international
conventions and laws, national laws, international rules and
customs. 18
quy tắc tập quán quốc tế (k phải luật) -> discretionary legal nature: t chất p lí tuỳ ý
(international rules and customs) -> Tất cả văn bản được ban hành bởi ICC
(UCP, URC, URR, ISBP, interms) -> cần dẫn chiếu để các bên tham gia tuân theo

( sử dụng phiên bản nào cx dc -> ghi rõ ra)

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COMPARISON OF DISCRETIONARY AND

MANDATORY LEGAL NATURE
Features Discretionary Mandatory

Reference to the Necessary to Not necessary

dẫn chiếu
agreement reference
Amend and Permitted Not permitted
supplement content
Versions Have the same Later version
legal value negates previous
(previous versions versions (previous
remain valid) versions are invalid)
Legal value: Interntional conventions and laws > national law >
international rules and customs.

1.4. CORRESPONDENT BANKING

1.4.1. Definition of correspondent banking:

dc uỷ quyền hoặc dc yêu cầu do 1 ngân hàng khác (thực hiện hộ)
Correspondent banking is an operation
in which a commercial bank performs
banking services as authorized or or
requested by another domestic or
foreign commercial bank.

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. cạnh tranh vs các ngân hàng đa quốc gia (có nhìu chi nhánh ở các nước
4/15/2023
khác nhau) -> hạ chi phí (rẻ đi)
. globalization of F and Invest activities: cần p có sự liên kết giữa các Banks
khác quốc gia -> thúc đẩy Bank đại lí phát triển
. phát tiển của IT: hệ thống thanh toán toàn cầu sẽ giảm chi phí, chính xác,
dễ dàng hơn -> banks đại lí phát triển

1.4. CORRESPONDENT BANKING

1.4.2. Role of correspondent banking:

* Enhancing profitability for commercial banks:

- Reducing market entry costs; costs can be adjusted

flexibly when providing services to customers.

- In the current context, the correspondent banking has

tối ưu hơn việc lập 1 chi nhánh ở nc ngoài
high potential growth and profitability.
và k thực hiện hết các chức năng của chi nhánh
* Enhancing competitiveness for commercial banks:
by creating customers’ trust from providing safe, fast
and accurate services through correspondent banks. 21
ngân hàng đại lí k hưởng tiến thơm,
ngân hàng giao dịch nhờ đại lí ms hưởng

1.4. CORRESPONDENT BANKING

1.4.3. Establishing correspondent banking
relationships: including the following steps:
uy tín, mạng lưới rộng, sp đa dạng
- Choose a bank to build correspondent relationship.
năng lực tài chính, kinh doanh, tiềm năng phát triển trong tl,
- Assess the capabilities of the partner bank.
chính sách ngân hàng đại lí có tốt hay k
- Negotiate and agree between the two parties on the
following content: the basis for checking the legality of
documents; the transactions that can be provided to each
other; determining the types of limit provided to each
other; the types of reports and information provided to
each other; a list of correspondent banks in third
countries…
- Open an account at the correspondent bank. 22

mở bằng đồng nội tệ của quốc gia của ngân hàng đại lí
-> k bị quản lị hay hạn chế bởi các chính sách ngoại tệ của quốc gia đó

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1.4. CORRESPONDENT BANKING

* Types of accounts used in international payment:
k kì hạn
- Nostro account: is a demand deposit account of "our
bank" opened at a foreign correspondent bank.
- Vostro account: is a demand deposit account of a
foreign correspondent bank opened at "our bank".
For example: A Vietnamese bank opens an account in
USD at an American bank. The American bank opens an
account in VND at the Vietnamese bank. Who calls
Nostro? Who calls Vostro? How are remittance entries of
USD (or VND) from Vietnam to America and vice versa
carried out? 23

1.4. CORRESPONDENT BANKING

1.4.4. Main services: including:

- Clearing services (Thanh toán bù trừ)
- Trade Finance (Tài trợ ngoại thương)
- Syndicated Loan (Cho vay hợp vốn hay
đồng tài trợ)
- Treasury Services (Dịch vụ nguồn vốn)
- Advisory Services (Dịch vụ tư vấn)
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1.4. CORRESPONDENT BANKING

1.4.5. Information systems of correspondent banks: main
systems:
* SWIFT – The Society for Worldwide Interbank Financial
Telecommunications (Hệ thống viễn thông tài chính liên ngân
hàng toàn cầu): In 2018, over 11,000 financial institutions in
over 200 countries using it and transferring over 7.8 billion
messages (www.swift.com, updated on 30.08.2019). BOJNET nhật
* CHIPS – Clearing House Interbank Payment System (Hệ TBF pháp
thống thanh toán bù trừ liên ngân hàng tại Mỹ): in the US, it fedwire, ACH
controls 95% of cross-border payments in USD.
* CHAPS – Clearing House Automated Payment System (Hệ
thống thanh toán bù trừ tự động tại Anh): a payment system
for GBP transactions. In 2018, CHAPS processed 83.5 trillion
GBP (www.chapsco.co.uk, updated on 30.08.2019) 25

1.4. CORRESPONDENT BANKING

1.4.5. SWIFT:
* It’s a member-owned cooperative through which the
financial world conducts its business operations with speed,
certainty and confidence.
* Provide the proprietary communications platform, products
and services that allow customers to connect and exchange
financial information securely and reliably.
* SWIFT is solely a carrier of messages. It does not hold
funds nor does it manage accounts on behalf of customers,
nor does it store financial information on an on-going basis.
As a data carrier, SWIFT transports messages between two
financial institutions.
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1.4. CORRESPONDENT BANKING

1.4.5. SWIFT:
* It’s a member-owned cooperative through which the
financial world conducts its business operations with speed,
certainty and confidence.
* Provide the proprietary communications platform, products
and services that allow customers to connect and exchange
financial information securely and reliably.
* SWIFT is solely a carrier of messages. It does not hold
funds nor does it manage accounts on behalf of customers,
nor does it store financial information on an on-going basis.
As a data carrier, SWIFT transports messages between two
financial institutions.
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1.4. CORRESPONDENT BANKING

1.4.5. SWIFT: BIC
Swift code: is an international bank code that identifies
particular banks worldwide. A swift code consists of 8 or 11
characters. Ex: VCB: BFTVVNVX ; VCB HCM: BFTVVNVX007.
8 là hội sở, 11 là chi nhánh

Bank Country Area Branch

code code code code

Swift message: Including 9 groups of message type, every

group of message type is used for a specific type of
international banking transaction.
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