A letter of credit is a document issued mostly by a financial institution which usually provides an irrevocable payment undertaking (it can also be revocable, confirmed, unconfirmed, transferable or others e.g. back to back: revolving but is most commonly irrevocable/confirmed) to a beneficiary against complying documents as stated in the Letter of Credit.
In 1150, the Knights Templar began generating letters of credit for pilgrims journeying to the Holy Land: pilgrims deposited their valuables with a local Templar preceptory before embarking, received an encrypted document indicating the value of their deposit, then used that document upon arrival in the Holy Land to retrieve their funds.[1]
Notes and references[]
- ↑ Wasserman, James. An Illustrated History of the Knights Templar. Rochester, Vermont: Destiny Books, 2006.