MT760 in Commodity Trading: What It Is and When You Actually Need It

You're negotiating a petroleum deal and the seller's procedure document mentions "provide MT760 within 72 hours of signing LOI." Your first thought is probably "what the hell is an MT760?" Your second thought might be "is this legitimate or is this seller trying to scam me?"

Both are excellent questions. MT760 is one of those banking terms that gets thrown around constantly in petroleum trading circles, often by people who don't fully understand what it means. Some sellers use it as a legitimate business requirement. Others use it as a filter or worse, as part of a scam to identify inexperienced buyers they can manipulate.

This guide will help you understand exactly what MT760 is, when it's a reasonable requirement, when it's a red flag, and what you should do when someone demands it.

What is MT760?

Let's start with the basics. MT760 is a SWIFT message format used to transmit a Standby Letter of Credit (SBLC) from one bank to another. That's it. It's not a magical financial instrument, not a complex derivative, not some secret banking tool that only insiders know about.

Breaking down the terminology: "MT" stands for Message Type in the SWIFT banking system. "760" is the specific code assigned to SBLC and bank guarantee transmissions. SBLC stands for Standby Letter of Credit, which is a bank's guarantee to pay a beneficiary if specific conditions are met.

Here's the key thing to understand: MT760 is the delivery method, not the thing being delivered. It's like saying "send it via FedEx" versus "send the package." When sellers say "send MT760," they're really saying "have your bank send a Standby Letter of Credit via SWIFT message format 760."

This distinction matters because people often talk about MT760 as if it's something different from SBLC. It's not. They're the same thing – MT760 is just the technical format for how banks transmit SBLCs to each other.

What Does an SBLC Actually Do?

Now that we know what MT760 is technically, let's talk about what it does practically. An SBLC is your bank's promise to pay the seller if you don't pay under the conditions you've agreed to in your contract.

Think of it like this: you're buying $1 million worth of EN590 diesel from a supplier in another country. You've never worked together before. The supplier is nervous about shipping product to someone they don't know. What if you don't pay? They're out a million dollars in product.

Your bank issues an SBLC and transmits it via MT760 to the supplier's bank. This guarantee says "if the buyer doesn't pay for the fuel after receiving it according to the agreed terms, we the bank will pay you." Now the supplier has protection. If you fail to pay, they can claim the money from your bank instead.

This is fundamentally a risk mitigation tool. It protects sellers from buyer non-payment in situations where trust hasn't been established yet. The bank is essentially vouching for you financially, backed by collateral you've provided to them.

When is MT760 Legitimately Required?

There are absolutely legitimate scenarios where a seller requesting MT760 makes perfect business sense. Understanding these scenarios helps you differentiate between professional sellers with reasonable requirements and scammers using MT760 as a manipulation tool.

Large transactions are the most obvious legitimate use case. When you're talking about $500,000 or more in product value, sellers want payment security. The larger the transaction, the more reasonable an SBLC request becomes. Nobody wants to ship $5 million in diesel to a stranger without some form of guarantee.

New relationships also justify SBLC requirements. If this is your first transaction with a seller and they don't know you from Adam, asking for payment security is entirely reasonable. They have no history to judge whether you're a reliable buyer. The SBLC substitutes for the trust that doesn't exist yet.

International trade adds another layer of justification. When buyer and seller are in different countries with different legal systems, enforcing contracts becomes complicated if something goes wrong. An SBLC provides recourse through the banking system that both parties trust more than trying to sue someone in a foreign court.

Long-term contracts with multiple shipments make SBLC particularly sensible. If you've committed to buying product monthly for a year, the seller wants assurance you'll keep paying for all those shipments. An SBLC for the contract value protects them over the entire term.

Finally, if you're a buyer located in what's considered a high-risk jurisdiction – perhaps a country with capital controls, political instability, or a history of payment defaults – sellers will almost certainly request SBLC. This isn't personal; it's risk management based on country risk assessment.

In all these scenarios, MT760 is a legitimate business requirement. It's not a scam; it's standard international trade practice for protecting sellers in high-value transactions between parties who don't know each other well.

When is MT760 a Red Flag?

Now let's talk about when MT760 requirements should make you immediately suspicious. These are the patterns you'll see in scams or when dealing with inexperienced sellers who don't understand how real transactions work.

The biggest red flag is when a seller demands MT760 before showing you any proof of product. This is backwards and wrong. The proper sequence is always: verify the product exists first, then discuss payment security. If someone insists you provide an expensive bank guarantee before they'll even let you verify they have product, they either don't have product or they're running a scam.

Think about this logically. Why would a legitimate seller who has real product refuse to let you verify it until after you've provided payment security? They want you to verify! Your confidence after verification makes the transaction proceed smoothly. Refusing to allow verification suggests there's nothing to verify.

MT760 requests for small transactions are also suspicious. If someone wants a Standby Letter of Credit for a $50,000 or $100,000 purchase, they either don't understand the costs involved or they're using it as a filter to weed out buyers who might actually check things. The cost of obtaining SBLC simply doesn't make economic sense for small deals. Legitimate small-scale sellers use simpler payment methods.

Impossible timelines reveal inexperience or manipulation. "Send MT760 within 48 hours" isn't realistic. Banks need 2-4 weeks minimum to process SBLC applications, conduct credit reviews, draft terms, and issue the instrument. If a seller doesn't know this, they probably haven't done many real transactions. If they do know this and demand it anyway, they're testing whether you're inexperienced enough to think it's possible.

Demanding MT760 before even establishing a basic relationship is another warning sign. Legitimate sellers introduce themselves, share company information, have proper conversations about requirements and capabilities, and then discuss payment terms. If someone's leading with "send MT760" before you even know who they are, something's wrong.

Finally, watch out for sellers who absolutely refuse to consider any alternatives to MT760. Professional sellers understand that different buyers have different capabilities and circumstances. They'll discuss options – Letters of Credit, escrow services, trial orders, payment against documents. Rigid insistence on one specific payment instrument with no flexibility suggests the seller is more interested in creating barriers than closing deals.

The Real Cost of Obtaining MT760

Before agreeing to provide MT760, you need to understand what it actually costs. Many buyers discover these costs only after they've already committed, and they're shocked by the financial burden.

Your bank will charge fees typically ranging from 1-4% of the SBLC value annually. For a $1 million SBLC, that's $10,000 to $40,000 in bank fees alone. These fees are usually charged upfront for the term of the SBLC, whether that's 6 months, a year, or longer.

On top of the percentage fee, expect processing charges of $1,000-$4,000 to cover the administrative work of setting up the instrument, coordinating with the beneficiary's bank, and managing the SWIFT transmission.

But here's where the real financial impact hits: collateral requirements. Banks require 100-110% of the SBLC value frozen in your account or available via credit line. For that $1 million SBLC, you need to tie up $1 million in capital that can't be used for anything else. Not for buying inventory, not for operations, not for other opportunities. It's locked until the SBLC expires.

The timeline matters too. Banks need 2-4 weeks to issue an SBLC. You can't rush this process. If you don't have existing credit facilities with your bank, add another 2-4 weeks for credit line approval. We're talking about a month or more from application to issuance.

When you factor in the direct fees plus the opportunity cost of having that capital frozen, the true cost of providing MT760 can easily exceed 5-7% of the transaction value. On a $1 million deal, you might be looking at $50,000-$70,000 in total cost and opportunity cost.

This is why MT760 makes sense for large transactions but not for small ones. The cost structure simply doesn't work when you're buying $50,000 worth of product.

What to Do Before Agreeing to Provide MT760

If a seller requests MT760 and you're considering providing it, there's a specific sequence you should follow. Skipping any of these steps significantly increases your risk of problems or losses.

First and foremost, never agree to provide MT760 until the seller has given you complete Proof of Product documentation. This includes Tank Storage Receipt, recent SGS or inspection reports, refinery documents, and whatever else is standard for the product type you're buying. No proof of product means no MT760 discussion yet.

Once you have documents, verify everything. Don't just look at PDFs and assume they're real. Contact the storage terminal directly and confirm the Tank Storage Receipt is genuine. Check that the SGS report serial number is valid by calling SGS. Verify the seller's authority to sell by confirming they're listed as the product owner or mandate holder. This verification must happen before you commit to SBLC.

You also need to verify your own ability to obtain the instrument. Call your bank before agreeing to anything. Ask them directly: can you issue an SBLC for this amount? What collateral will they require? What fees will they charge? What's the timeline? Some buyers agree to provide MT760 only to discover their bank doesn't issue SBLCs or won't approve one for them.

Calculate the total cost including all fees, collateral requirements, and opportunity costs. Then ask yourself honestly: can you afford this? Is the profit margin on the transaction sufficient to justify these costs? Have you budgeted for this expense?

Make absolutely sure all contract terms are crystal clear before providing any payment instrument. What are you buying? What quantity? What price? What are the delivery terms? What happens if there are quality issues? What are the conditions under which the SBLC can be called? Vague contract terms combined with payment guarantees create enormous risk.

Finally, explore alternatives before committing. Ask the seller: would you accept a Documentary Letter of Credit instead? Would you consider an escrow arrangement? Can we start with a smaller trial order that doesn't require SBLC? Legitimate sellers will engage with these discussions. Scammers or inflexible sellers won't.

The golden rule bears repeating: product verification first, payment instrument second. This sequence protects you from the vast majority of petroleum trading scams.

Alternatives When You Can't or Won't Provide MT760

Not every buyer can obtain an SBLC from their bank. Maybe you don't have the collateral. Maybe your bank doesn't issue them. Maybe the cost simply doesn't justify the benefit for your transaction size. That's okay – there are alternatives.

Documentary Letters of Credit (transmitted via MT700) are more traditional trade finance instruments that many banks are more comfortable issuing. They work similarly to SBLC but with some procedural differences. Your bank might find LC easier to approve than SBLC, especially if you're a smaller buyer.

Escrow services provide protection for both parties at a fraction of SBLC cost. You deposit funds with a licensed escrow company, the seller ships product and provides proof of shipment, the escrow company verifies documents match agreed terms, then releases payment to seller. Escrow fees typically run 0.5-2% versus 1-4%+ for SBLC, and you don't need to tie up 110% in collateral.

Starting with a smaller trial order is often the smartest approach. Buy $50,000-$100,000 worth instead of $1 million. At that scale, many sellers will accept simpler payment methods. Complete the trial successfully, demonstrate you pay on time, and build trust. After 2-3 successful transactions, sellers often become more flexible on payment terms for larger orders.

Cash Against Documents is another option where you pay when the seller presents shipping documents proving they've shipped the product. There's some risk here – you're paying based on documents before taking physical possession – but it's manageable risk if you've done proper verification and you're working with a seller who has verifiable track record.

Finally, consider finding a different supplier. Some suppliers specifically work with smaller buyers and understand the challenges of obtaining SBLC. They structure their business to accommodate buyers who can't meet major bank instrument requirements. These suppliers exist – they're just not always the first ones you find online.

Common MT760 Scams to Watch For

Understanding the scam patterns helps you spot them before you waste time or money. These are the most frequent MT760-related scams in petroleum trading.

Scam pattern one is demanding MT760 upfront before showing any proof of product. The scammer claims they need to see your "financial capability" before they'll share documents. In reality, no product exists. They want you to start the SBLC application process so they can collect your banking information, or they'll try to extract "facilitation fees" to help you obtain it, or they simply want to see if you're inexperienced enough to actually start the process without verification.

Scam pattern two involves offering to "help you obtain" MT760 for an upfront fee. The seller or a "facilitator" they introduce claims they have special relationships with banks or can arrange SBLC approval when your bank won't issue one. They just need $5,000 or $10,000 upfront to start the process. You pay the fee, they disappear, and you have no SBLC. The fundamental reality these scammers ignore is that only your bank can issue an SBLC for you. No third party can arrange it.

Scam pattern three uses MT760 request purely to verify your financial standing. The seller claims "we just need to see you can get MT760 approved to know you're serious." This makes no sense. There are much cheaper ways to demonstrate financial capacity – bank reference letters cost nothing, for example. Demanding you spend thousands starting an SBLC application just to prove seriousness suggests the seller has ulterior motives.

Scam pattern four involves pressure tactics. "Provide MT760 within 48 hours or this deal will be gone – I have other buyers waiting." This creates artificial urgency to prevent you from thinking clearly or doing proper diligence. Legitimate deals don't evaporate in 48 hours. If product exists and the seller is real, the deal can wait the 2-4 weeks required for proper SBLC issuance.

A Simple Decision Framework

When a seller requests MT760, work through these questions systematically before responding:

Have I verified the product exists? If the answer is no, your response to the seller should be "I'm happy to discuss payment security after I've completed product verification. Let's schedule that verification first." Don't discuss MT760 until verification is complete.

Is the transaction large enough to justify SBLC cost? If you're talking about purchases under $200,000, the economics are questionable. Ask the seller about alternatives appropriate for the transaction size.

Can my bank actually issue it? Check with your bank before committing. Some banks simply don't offer SBLC services, or they may have minimum requirements you don't meet.

Can I afford the fees and collateral? Calculate the real cost and ask honestly whether your profit margin supports it. If the SBLC costs $30,000 and your profit on the deal is $40,000, is it worth tying up capital and going through the complexity for $10,000 net?

Will the seller consider alternatives? Propose options and see how they respond. Flexibility and professional discussion suggest legitimacy. Rigid refusal to discuss anything other than MT760 suggests problems.

If your answers are mostly "no" or "uncertain," negotiate alternatives or find a different supplier. Don't force yourself into MT760 when it doesn't make sense for your situation.

What to Say to Your Bank

If you've decided MT760 is appropriate and you want to proceed, here's how to approach your bank. Walk in with clear information and specific questions.

Tell them: "I need a Standby Letter of Credit issued and sent via MT760 SWIFT message for a petroleum purchase. The amount is [specific dollar amount], the beneficiary is [seller's bank name and SWIFT code], and the term is [number of days or months]. What are your fees and what collateral do you require?"

This gives your banker all the essential information they need to start the process. They'll guide you through their specific requirements, which may include:

• Application forms with transaction details
• Credit review and approval process
• Collateral deposit or credit line arrangement
• SBLC term sheet review and negotiation
• Legal review of the underlying sales contract
• SWIFT transmission to beneficiary's bank

Be prepared for this to take time. Banks don't rush SBLC issuance. They're putting their money on the line guaranteeing your payment, so they conduct thorough due diligence on both you and the transaction.

Bottom Line on MT760

After all this detail, let's distill it down to the essentials you need to remember.

MT760 is simply the SWIFT message format for sending a Standby Letter of Credit. It's not mysterious, not magical, just a banking transmission method.

MT760 is legitimate when the transaction is large, the relationship is new, you've already verified the product exists, and the seller is professional and flexible. In these contexts, it's standard international trade practice.

MT760 is a red flag when it's required before product verification, demanded for small transactions, comes with impossible timelines, or when the seller refuses to discuss any alternatives. These patterns suggest scams or inexperienced sellers you don't want to work with.

The sequence that protects you is always the same: verify product first, discuss payment security second. Never reverse this order.

If you can't or won't provide MT760, alternatives exist. Letters of Credit, escrow services, trial orders, payment against documents, or different suppliers who work with buyers at your scale and capability level.

The costs are substantial – expect 1-4% in fees plus 100-110% collateral tied up plus opportunity costs. Make sure your transaction economics support these costs before committing.

Take Action

The best approach to MT760 requests is working with suppliers who understand proper procedures and respect the sequence of verification before payment instruments. These suppliers exist, and they're the ones you want to build relationships with.

Submit an RFQ on CommoditiesHub and discuss payment terms with verified, professional suppliers. Explain your capabilities honestly – whether you can provide SBLC or need alternative arrangements. Professional sellers will work with you to find payment methods that protect both parties while making economic sense for the transaction size.

Remember: if a seller's first message to you is demanding MT760, that's probably not a seller worth your time. Good suppliers lead with product details, company information, and building relationships – not with payment instrument demands.