The Bank Payment Obligation: characteristics, similarities and differences with the Documentary Credit

The aim of this article is to identify and describe the main characteristics of the bank payment obligation (BPO), as well as the similarities and differences it presents with the documentary credit (DC). The definitions of these means of payment contained in the uniform rules that govern them, their general operation, and the functions they both fulfil are analysed. This paper argues that although these means of payment have similarities and the BPO solves many of the difficulties presented by the DC, they have different characteristics, in terms that it does not seem appropriate to point out that one is called upon to completely replace the other. In this context, the BPO expands the payment, guarantee, and financing alternatives available to actors in international commercial traffic. However, the BPO also presents some disadvantages that might be a cause of its adoption in traffic being slower than expected.