These questions come from importers, exporters, CFOs, and logistics managers who are evaluating alternatives to traditional trade finance instruments. If your question isn't answered here, the interactive demo walks through a complete transaction, or reach us at info@fluxotrade.co.
Letters of credit and alternativesThe main alternatives to a letter of credit (LC) are: open account (seller ships and trusts the buyer to pay later — high risk for the seller), advance payment (buyer pays upfront and trusts the seller to ship — high risk for the buyer), documentary collection (bank handles documents but provides no payment guarantee), and smart contract escrow — buyer deposits funds into a self-executing contract that releases payment automatically when defined delivery conditions are confirmed.
Smart contract escrow delivers the same payment protection as a letter of credit at a fraction of the cost, with settlement in seconds rather than days. For small and medium-sized businesses, smart contract escrow is often the only practical option — most banks will not issue letters of credit for transactions under $500,000 or for businesses without an established multi-year banking relationship.
A typical letter of credit on a $100,000 shipment costs $2,300 to $3,400 in total bank fees. This breaks down as: issuance fee ($500–$1,500), advising fee ($300–$600), confirmation fee if required ($200–$500), and any amendment fees ($200–$500 each time terms change — and they frequently do).
Beyond cost, letters of credit are rejected on first presentation approximately 70% of the time due to document discrepancies — a single mismatched date, an incorrect HS code, or a quantity stated differently across documents. Each rejection triggers an amendment, another fee, and another week of delay. Settlement after documents are accepted takes 3 to 5 business days.
Fluxo's platform fee on the same $100,000 shipment is $150 (0.15% of transaction value), with amendment cost of $0 and settlement in 4 seconds. Figures are illustrative and subject to change.
A letter of credit is a bank's promise to pay the seller if certain document conditions are met. The bank evaluates the documents and decides whether to pay. The risk: banks can release payment if documents appear compliant on their face, even if goods do not match the contract. The bank is not looking at the cargo — only at the paper.
Smart contract escrow holds the buyer's actual funds in a neutral contract and releases them when delivery conditions are confirmed by objective triggers — GPS arrival, document review pass, inspector sign-off. The conditions are enforced by code, not by a bank's judgment. If the condition is not met, funds are not released.
For the seller, payment certainty under smart contract escrow is equivalent to or better than a letter of credit — the money is already in the contract. For the buyer, there is no counterparty risk — the money is in a contract neither party controls, not in a bank's account.
UCP 600 (Uniform Customs and Practice for Documentary Credits, 2007 revision) is the set of rules published by the International Chamber of Commerce that governs how letters of credit operate worldwide. It defines how banks must examine documents, what constitutes a compliant presentation, how discrepancies are handled, and what obligations each party has.
UCP 600 runs to 39 articles of interpretive guidance because the letter of credit process involves enough ambiguity and dispute risk that 39 articles of rules are necessary to manage it. The 70% first-presentation rejection rate is a direct consequence of the complexity UCP 600 was designed to contain.
Fluxo does not operate under UCP 600. Smart contract escrow replaces the document examination process with automated milestone verification — conditions are defined before any funds are deposited, and execution is automatic when conditions are met. There is no bank examining documents for compliance, no discrepancy risk, and no need for 39 articles of rules.
Smart contract escrow works in four steps. First, buyer and seller agree on terms — price, quantity, delivery milestones, inspection requirements, short shipment tolerance — and both sign the contract digitally. Second, the buyer deposits the agreed amount into a smart contract: a self-executing program on a public blockchain. The funds are held by the contract, not by Fluxo or any intermediary. Third, when the agreed milestone condition is confirmed — GPS arrival at the destination port, a document review pass, or an inspector sign-off — the smart contract executes automatically and releases funds to the seller. Fourth, the seller receives payment in seconds.
No bank approval is required. No business day delays. If the milestone condition is not met, funds remain in escrow and a dispute process is triggered. The buyer's money is always protected until delivery is confirmed.
Milestone-triggered payment means that funds are released from escrow automatically when a specific, pre-agreed condition is confirmed — not when a human decides to release them. Common milestones include GPS arrival of the shipping container at the destination port, a document review pass confirming shipping documents are compliant, or an inspector sign-off at origin or destination.
The milestone is defined in the contract before any funds are deposited. When the trigger fires, the smart contract executes immediately — in seconds, at any time of day, including Friday evenings when banks are closed. Milestone-triggered payment eliminates the delay and human discretion inherent in traditional settlement processes.
An earnest bond (also called a performance bond or security deposit) is an amount posted by the seller at contract signing as a guarantee of performance, instead of the buyer making a full escrow deposit. In the Fluxo model: the seller deposits a bond — typically 5 to 10 percent of contract value — into the smart contract at signing. The buyer deposits nothing. If the seller delivers as agreed, the bond returns to the seller automatically at delivery confirmation. If the seller fails to perform, the buyer claims against the bond through the dispute process.
This model is most appropriate for established trading relationships where both parties have prior transaction history. The buyer's working capital is never tied up in escrow. The seller's exposure is limited to the bond amount. Both parties have contractual protection without the capital requirements of full escrow.
Contract amendments on Fluxo are bilateral signed records layered on top of the original signed contract. When a loading date shifts, a quantity changes, or any term needs updating, either party proposes an amendment. The other party sees the exact diff — what changed, what stayed the same — and accepts or rejects. If accepted, both sign and the amendment is recorded permanently on the same public ledger as the original contract.
Neither party can alter the contract unilaterally. An amendment requires bilateral consent. Under a letter of credit, each amendment costs $200 to $500 and takes 3 to 5 business days. On Fluxo, an amendment costs nothing and takes under 2 minutes.
The safest way to pay an overseas supplier without a letter of credit is smart contract escrow. You deposit your payment into a self-executing contract that holds the funds until your agreed delivery conditions are confirmed. Your supplier knows payment is guaranteed the moment they deliver. You know your money is protected until delivery is confirmed.
With Fluxo, you can fund via standard wire transfer — no digital wallet or stablecoin experience required. A licensed currency partner handles the conversion and deposits funds into the escrow contract automatically. Your accounts payable team sees a standard outgoing wire confirmation.
Yes. Fluxo uses USDT, a US dollar stablecoin, as the settlement currency within its smart contract system. USDT maintains a 1:1 peg with the US dollar, eliminating foreign exchange exposure for parties in currency-unstable markets. For buyers and sellers who already hold USDT, funding and settlement are direct and near-instant.
For parties who prefer not to interact with stablecoins directly, Fluxo offers a wire transfer on-ramp: the buyer wires USD from their corporate bank account, a licensed currency partner converts it to USDT and deposits it into escrow automatically. The buyer only ever sees a standard outgoing wire confirmation. The seller can receive USDT or have it converted to their local currency via a licensed currency partner.
To pay a Brazilian supplier safely from the United States using Fluxo: agree on contract terms inside the platform, wire USD from your US corporate bank account to a licensed currency partner (they convert to USDT and deposit into the smart contract escrow automatically), and when delivery is confirmed the smart contract releases funds. Your Brazilian supplier receives Brazilian reais in their local bank account within minutes via a licensed payment partner authorized for the Brazil corridor.
No digital wallets required for either party. No SWIFT correspondent bank chain. Settlement happens the same day, including weekends and bank holidays.
Fluxo addresses post-upload document tampering through SHA-256 document fingerprinting. When a document is uploaded — packing list, bill of lading, commercial invoice, certificate of origin — a mathematical function processes every byte of the file and produces a unique 64-character fingerprint written permanently to a public blockchain ledger with a timestamp.
If the document is altered after upload — even changing a single digit in a quantity field — the fingerprint changes completely. Any party, auditor, or arbitrator can verify that the document currently in evidence is identical to the document submitted at upload. This makes post-upload document alteration provably detectable. Note: the fingerprint proves what was uploaded and when — it does not independently verify that what was uploaded was accurate at the time of upload.
Fluxo has three dispute levels. Level 0 (free): if a smart contract detects a failed condition, funds freeze automatically and both parties have 48 hours to resolve directly by uploading counter-documentation through a structured channel on the platform. Level 1 ($150 total): a trained neutral reviewer — a trade lawyer or experienced customs broker — examines the evidence and issues a binding determination within hours. The fee is charged to the losing party. Level 2 (formal arbitration): the platform routes significant disputes to ICC or LCIA arbitration. Fluxo is never the judge on large commercial claims.
The platform earns revenue from dispute resolution fees, which means it is economically aligned with resolving disputes fairly and quickly.
Trade finance for small and medium-sized enterprises (SMEs) refers to financial instruments that enable businesses doing $50,000 to $10 million in cross-border transactions to conduct international trade with payment protection. Traditional trade finance — letters of credit, bank guarantees — was designed for large corporations and requires established banking relationships and minimum transaction sizes that most smaller businesses cannot meet.
Fluxo has no minimum transaction size and no banking relationship requirement. Any buyer and seller who can agree on terms can create a smart contract escrow arrangement. The infrastructure that was previously available only to large corporations is accessible to any business doing international trade.
Fluxo's smart contract infrastructure operates globally. Wire transfer on-ramp and local currency settlement are currently optimized for US, Brazil, Argentina, Paraguay, and Peru corridors, with global USDT settlement available for all other corridors. Parties outside the supported wire corridors can fund and settle directly in USDT. Expansion to additional local currency corridors is planned.