UK bank Lloyds has completed a series of digital transactions alongside Mercore Capital unearthing new use cases for digital cross-border payments.
Performed under the International Trade and Forfaiting Assocation’s (ITFA) Digital Negotiable Instrument (DNI) initiative, the documentary collection transactions seeked to use shared principles on advanced technology between Lloyds and Mercore.
The Documentary Collection transactions involved the shipment of sugar from Mercore’s client, an exporter based in the Americas, to Lloyds’ client in the UK.
Mercore created a draft digital Bill of Exchange (dBE) and arranged for it to be drawn by their exporting client. The drawn dBE was transferred via a node-to-node transfer to Lloyds which then arranged for the dBE to be electronically accepted by its importing client.
On confirmation of acceptance by Lloyds, Mercore was then able to purchase the dBE from its client, pre-paying them ahead of maturity.
Surath Sengupta, Managing Director of Trade Innovation and Transformation for Lloyds, said: “It’s been fantastic to be involved in these groundbreaking trades that build on the success of the world-leading digital transactions we have completed over the last two years.
“Digital trade solutions make it simpler, faster and more efficient for our clients to do business. These transactions with Mercore demonstrate the ease at which digital documents can be created and transferred between parties, and will create more opportunities for digitalisation.
“We look forward to collaborating with more clients and banking partners to make digital trade a reality.”
These transactions are the first under ITFA’s DNI Initiative to involve the node-to-node transfer of a DNI between two separate financial institutions, and the first to involve the handling of a DNI between two financial institutions each facing off to an importer or exporter.
The use of a dBE allowed for faster execution compared to a paper process, resulting in earlier access to funds for the exporter, supporting their working capital needs.
Anthony Wadsworth-Hill, Co-Founder, Chief Business Officer and Deputy CEO of Mercore, added: “Mercore is delighted to partner with Lloyds Bank to bring about this digital ‘first’ for the market. We believe that greater collaboration between banks and non-banks is critical to drive improved financial inclusion for businesses in the UK and overseas.
“We expect this to be the first of many transactions with Lloyds Bank, and we encourage other banks and non-banks to do the same – given the win-win efficiency benefit to both institutions and their clients.
“Mercore is a fast adopter of digital trade solutions and looks forward to further ground-breaking transactions to help close the global trade finance gap.”
