According to a recent report published by Allied Market Research, titled, “Letter of Credit Confirmation Market by L/C Type and End User: Opportunity Analysis and Industry Forecast, 2020-2027,” the global letter of credit confirmation market was valued at $4.30 billion in 2019, and is projected to reach $4.99 billion by 2027, growing at a CAGR of 3.18% from 2020 to 2027.
A letter of credit confirmation is a process of document verifications and validating proof of export against the letter of credit requirements, which is conducted by confirming banks. These banks add its confirmation to a credit upon the issuing bank’s request. In addition, if the buyer is unable to make payment on the purchase, the seller makes a demand on issuing bank for the payment. Furthermore, rise in demand for customized trade finance solutions globally and regulatory support in growth of strict regulations for secured letter of credit confirmation services are some of the major letter of credit confirmation market trends.
In addition, due to increased global trade and to avoid risk of payments, the importers and exporters are largely implementing protection for their trade documents via letter of credit confirmation services. However, the online letter of involvement of several intermediaries has led to the credit confirmation procedure more prone to fraudulent and cyber attacks such as loss of huge trade amounts and confidential data leakages. This, as a result, becoming major restraining factors in the letter of credit confirmation market.
On the basis of L/C type, the sight L/Cs segment dominated the letter of credit confirmation industry in 2019 and is projected to maintain its dominance during the forecast period. Sight payment methods are largely used by traders due to it instant and timely payment features in the market. Furthermore, under sight payments, the sellers receives the payment quickly after shipping the goods, thus fueling the market growth and are expected to grow at a significant CAGR during the forecast period.
The large enterprises segment accounted for the largest market share in letter of credit confirmation industry in 2019 and is projected to maintain its dominance during the forecast period. The presence of big giants from different industry verticals in foreign trade has led them to be the major adopter of letter of credit confirmation. However, small & medium enterprises segment is expected to exhibit highest growth during the forecasted period.
By region, the global letter of credit confirmation market was dominated by Asia-Pacific in 2019 and is expected to maintain this trend during the forecast period. The significant growth of trade among small & medium enterprises in developing economies, such as India and China are the major factors driving the letter of credit confirmation market growth. The dependency of traders in developing countries on letters of credit services is expected to maintain its dominance during the forecast period.
Key Findings Of The Study
By L/C type, the sight L/Cs segment led the letter of credit confirmation market size in terms of revenue in 2019.
By region, LAMEA is expected to exhibit significant growth during the forecasted period.
By end user, the large enterprises segmented accounted for the highest letter of credit confirmation market share in 2019.
By region, Asia-Pacific generated the highest revenue in 2019.
The key players profiled in the letter of credit confirmation market are Bank of America Corporation, Citigroup, Inc., DBS Bank Ltd, JP Morgan Chase & Co., Mizuho Bank, Ltd., MUFG Bank, Scotiabank, Standard Chartered, Sumitomo Mitsui Banking Corporation, and The PNC Financial Services Group, Inc. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.