What are the most common letter of credit discrepancies, and what do they cost?

Updated 11 October 2026 · 6 min read

The short answer

Most letter of credit refusals come from timing: shipping after the latest shipment date, or presenting the documents more than 21 days after shipment or after the credit expires. The rest come from documents that conflict with each other, describe the goods differently from the credit, lack a signature or endorsement, show the wrong consignee or notify party, insure less than 110 percent, or include a bill of lading that is not clean or not shipped on board. The ICC estimates that 65 to 80 percent of document sets are refused on first presentation. Each refusal costs a bank fee (USD 50 to EUR 175 in the published tariffs we checked), and the bank is no longer bound to pay: payment waits for the buyer to accept the discrepancies.

What counts as a discrepancy

Under a letter of credit, the bank pays against documents, not goods. It examines the documents alone and has at most five banking days after the day of presentation to decide whether they comply (UCP 600, article 14(a) and (b)). A presentation complies when it follows the terms of the credit, the rules of UCP 600 and international standard banking practice. The ICC writes that practice down in the ISBP. The latest edition is ISBP 821, published in 2023 after ISBP 745 from 2013.

Anything that falls short is a discrepancy. The documents do not have to be word for word identical. The rule in article 14(d) is that data in a document must not conflict with data in the same document, in another required document or in the credit.

The most common discrepancies

The ICC Banking Commission estimates that 65 to 80 percent of document sets under letters of credit are refused on first presentation. That is an estimate in a 2022 ICC briefing, not a new survey: the last ICC trade survey on the subject, in 2017, found that most respondents had seen no change. The same briefing names the usual causes. Most are timing problems. The rest come from documents prepared in a hurry.

Discrepancy	The rule (UCP 600)	How to avoid it
Shipped after the latest shipment date	The on-board date on the bill of lading is the shipment date (article 20(a)(ii)). The latest shipment date is not extended when the bank is closed (article 29(c)).	Check the on-board notation against the credit before you accept the bill. If the ship is late, ask for an amendment before loading.
Presented late	Original transport documents must be presented within 21 calendar days after shipment, or fewer if the credit says so, and never after the credit expires (article 14(c)).	Count from the on-board date. Leave days for couriers and corrections.
Data that conflict between documents	Data need not be identical but must not conflict (article 14(d)).	Prepare every document from the same data, and read the set side by side before presenting it.
Goods description not as in the credit	The invoice must describe the goods as the credit does (article 18(c)). Other documents may use general terms that do not conflict (article 14(e)).	Copy the credit's wording into the invoice, then add detail that does not contradict it.
Missing signature or endorsement	A bill of lading must be signed by the carrier, the master or a named agent (article 20(a)(i)). The ICC lists missing or incorrect endorsements among the usual faults.	Check the signature on every original, and the endorsement on the back of a "to order" bill. The invoice need not be signed unless the credit asks (article 18(a)(iv)).
Wrong consignee or notify party	When the applicant's address and contact details appear in the consignee or notify box, they must be as stated in the credit (article 14(j)).	Copy the applicant's name and address from the credit, letter by letter.
Insurance too low or dated too late	Unless the credit says otherwise, cover must be at least 110 percent of the CIF or CIP value (article 28(f)(ii)). The insurance document must not be dated after shipment unless it shows cover from that date (article 28(e)).	Multiply the CIF value by 1.1 and check the date on the policy.
Bill of lading not clean or not on board	Banks accept only clean transport documents, with no clause declaring the goods or packing defective (article 27). The bill must show shipment on board a named vessel (article 20(a)(ii)).	Look for clauses about damaged cartons, and for a dated on-board notation.

Which facts the documents share is explained in what must match between the bill of lading, invoice and packing list. Weight totals are in gross and net weight on the packing list, the parties in consignee vs notify party, and insurance values in FOB, freight and insurance on the invoice.

What a discrepancy costs

The visible cost is the bank's discrepancy fee. Each bank sets its own, and the ICC says that neither it nor UCP 600 can decide how the market handles these fees. Its view is that an issuing bank that intends to deduct a fee should say so in the credit, with the amount. Published examples:

Bank and tariff	Discrepancy fee
Standard Chartered Japan, tariff effective 2 September 2024	JPY 5,000 (or USD 50) on import bills under a credit
Barclays UAE, tariff in effect from 4 September 2026	USD 100 on import credits, for the beneficiary's account; USD 100 per discrepant presentation on export credits; AED 500 a month to hold discrepant documents
Standard Chartered South Africa, pricing effective 7 September 2026	USD 100 per set of discrepant documents
Deutsche Bank, price list for corporate clients in Germany, valid from July 2026	EUR 175 per transaction on import credits

The fee is the small part. A discrepant set loses the bank's promise to pay. The bank may refuse, and the issuing bank may ask the buyer whether it will accept the documents anyway (article 16(a) and (b)). Payment then depends on the buyer, which is the very risk the credit was meant to remove. The US International Trade Administration warns that discrepancies can stop the exporter from being paid. The ICC adds the delays: settlement and financing come later, fees rise, and the buyer gets the documents later. For a reefer that matters, because the buyer needs the original bill of lading to take delivery, so the container waits at the port while the banks write to each other.

Worked example: a frozen chicken set

Kestrel Frozen Foods sells 24 tonnes of frozen chicken leg quarters to Harbour Foods Ltd, CIF, under a credit with these terms: latest shipment 15 March, documents within 21 days after shipment, expiry 10 April, insurance for 110 percent of the invoice value. The invoice is for USD 52,800.

The reefer is loaded on 14 March, so the shipment date is fine.
Twenty-one days after 14 March is 4 April. The documents reach the bank on 6 April. The credit has not expired, but the presentation is late under article 14(c), and nothing can fix that afterwards.
The insurance certificate covers USD 52,800. It should cover at least USD 58,080 (52,800 × 1.1).
The packing list shows 25,600 kg gross and the bill of lading 25,200 kg. That is a conflict under article 14(d).

Three discrepancies. Within five banking days the bank sends one refusal notice that lists all of them (article 16(c) and (d)). If Harbour Foods waives them, Kestrel is paid less the fee; if not, the documents come back. The weights and the insurance could have been corrected in an afternoon before presentation. The late presentation could only have been avoided by sending the set earlier.

How to get it right the first time

Read the credit the day it arrives. If a date or a document cannot be met, ask for an amendment before loading. The ICC advises beneficiaries to check that they can produce, ship and present in time, with spare days for corrections.
Do not add data the credit does not ask for. The ICC names unnecessary extra data on documents among the main causes of problems.
Read the set against itself before the bank does, so that no document contradicts another.
Keep copies of UCP 600 and the ISBP. The ICC advises beneficiaries to have the ISBP, so they can prepare documents to the standard the banks use.

For every document a frozen container needs, see the export document checklist. The terms are explained in the glossary.

Questions people ask

Can the buyer accept documents with discrepancies?

Yes. When documents do not comply, the issuing bank may ask the buyer (the applicant) whether it will waive the discrepancies (UCP 600 article 16(b)). If the buyer agrees and the bank accepts, the bank pays, usually less its discrepancy fee. If not, the bank holds or returns the documents and is not bound to pay.

How long does the bank have to check the documents?

Each bank has at most five banking days after the day of presentation (UCP 600 article 14(b)). If it refuses, it must send a single notice listing every discrepancy by the end of the fifth banking day (article 16(c) and (d)). A bank that does not follow these steps cannot later claim the documents were discrepant (article 16(f)).

Who pays the discrepancy fee?

Usually the seller, because the fee is deducted from the payment. Barclays UAE's tariff of September 2026, for example, puts it on the beneficiary's account. The ICC's view is that an issuing bank that intends to deduct a fee should say so in the credit, with the amount.

Must every document use exactly the same words?

No. Data must not conflict, but they need not be identical (UCP 600 article 14(d)). Only the commercial invoice must describe the goods as the credit does (article 18(c)). The bill of lading and the certificates may use general terms that do not conflict with the credit (article 14(e)).