A T/T by MT103 is a SWIFT message transferring money from an applicant in one bank to a beneficiary in another bank; usually from an account in the first bank to an account in the other bank; however it is also possible to transfer money using MT103 without the applicant nor the beneficiary holding accounts in the involved banks; in this case the transfer of money is very similar to the transfer of money by ex. Western Union, i.e. from a sender to a receiver without any relation with Western Union in general.
Note that MT103/23 Conditional means that the MT103 has an active article 23 specifying the required identification of the beneficiary. Conditions in regards to the presentation of (other) documents than documents identifying the beneficiary are NOT possible using MT103. But require the use of Documentary Letter of Credits.
T/T by SWIFT MT103 payment applies in two ways:
- Advance Payment. Buyer pays full or partial payment upfront in advance to the seller. Of course, this payment method is more risky for the buyer than DLC or SBLC+TT; and is ONLY recommended for existing customers. However, advance payment in full or partial form will typically make it possible for the seller to offer the buyer a further discount.
- Cash against Documents (CaD).Seller sends by courier the shipping documents or other agreed documents to the buyer – in original or copies as agreed upon – and buyer responds by instructing buyer’s bank to transfer the payment from buyer’s account to seller’s account using SWIFT MT103.