16.10.2026
DLC (MT700) vs SBLC (MT760): which payment instrument to use in a diesel deal
Almost every EN590 offer names a payment instrument, most often a DLC or an SBLC. They sound similar, they both come from a bank, and both are sent between banks over SWIFT. But they play very different roles, and choosing the wrong one, or accepting badly drafted terms, is where many deals stall or fail.
What is a DLC (MT700)?
A documentary letter of credit is the bank's promise to pay the seller once the seller presents documents that comply exactly with the credit's terms. MT700 is the SWIFT message type used to issue it. In a diesel deal the required documents typically include the bill of lading, commercial invoice, certificates of quality and quantity from the agreed inspector and a certificate of origin.
The DLC is the actual payment mechanism: if the documents comply, the bank pays, regardless of disputes between buyer and seller about other matters. Documentary credits are normally issued subject to the ICC rules UCP 600.
The DLC is the actual payment mechanism: if the documents comply, the bank pays, regardless of disputes between buyer and seller about other matters. Documentary credits are normally issued subject to the ICC rules UCP 600.
What is an SBLC (MT760)?
A standby letter of credit is a guarantee. It does not pay for the cargo in the normal course of business; it pays only if the buyer fails to pay as agreed, after the seller presents a demand and the documents the standby requires. MT760 is the SWIFT message type used for guarantees and standby credits. Standby credits are usually issued subject to ISP98 or UCP 600.
In fuel deals an SBLC is often combined with open-account payment: the buyer pays by wire transfer against documents, and the SBLC protects the seller if that payment does not arrive.
In fuel deals an SBLC is often combined with open-account payment: the buyer pays by wire transfer against documents, and the SBLC protects the seller if that payment does not arrive.
DLC vs SBLC at a glance
Which one should you choose?
For a first deal with a new counterparty, a DLC is usually the safer option for both sides: the seller knows that the bank will pay for compliant documents, and the buyer knows that money is released only against evidence that the cargo was loaded and inspected. For a 12-month contract between parties that already trust each other, an SBLC with payment against documents can reduce banking costs. The final choice is a commercial negotiation and should be written into the SPA.
Clauses to check in the draft
- Issuing bank: a bank acceptable to the seller, sometimes with confirmation by a second bank.
- Required documents: exactly which certificates, issued by whom, and whether copies are acceptable.
- Latest shipment date and expiry date that match the delivery window in the SPA.
- Tolerance on quantity and amount (for example plus or minus 5 percent).
- Inspection clause: which inspector's results are final for payment.
- For SBLCs: what the demand must contain and when it can be made.
Common misunderstandings
- "SBLC first" procedures. A buyer being asked to issue an SBLC before the seller has shown verifiable proof of product carries more risk for the buyer.
- Pre-advice messages. A pre-advice tells the seller an instrument is coming; it is not the instrument itself.
- Leased or monetised instruments. Offers to "rent" an SBLC to fund a cargo are a well-known source of fraud and are not a normal way to pay for fuel.
FAQ
Is an SBLC a payment for the cargo?
No. An SBLC is a guarantee that pays only if the buyer fails to pay under the contract. The cargo itself is paid by another method, often a wire transfer against documents.
What does MT700 mean?
MT700 is the SWIFT message type banks use to issue a documentary letter of credit. MT760 is used for guarantees and standby letters of credit.
This article is general information, not legal or banking advice. Payment terms should be agreed with your bank and written into the SPA.