Letters of Credit

All Participants on CFN have provided some form of financial security. This security helps guarantee payment to other Participants for their remote purchases. When a foreign transaction occurs at your site, the card issuing Participant actually buys the product from you.

CFN acts as a clearinghouse for all transactions. This way, you do not receive hundreds of payments from Participants every settlement date. In addition, you do not have to pay hundreds of Participants for your remote transactions. CFN never takes title to the products.

It is a Mutual Access Agreement requirement that each Participant post a payment security in the amount equal to either four times the highest statement amount owed by the Participant in US dollars within the immediately prior 90 day period, or $10,000 US, whichever is greater. The security amount will be adjusted from time to time by CFN as your net amount changes.

The most common form of security is an Irrevocable Letter of Credit. A Letter of Credit is a guarantee by the bank that they will pay for any purchases if the Participant defaults on any drafted amounts. Other acceptable forms of security are Time Deposits (with CFN as the sole beneficiary), Financial Guarantee Bonds, and prepayments.

Participants violating financial security or payment provisions are subject to immediate restriction from Network access as determined by CFN.