Related News

Mercore and Lloyds take digital bill push to secondary market

Revolut hires Lloyds director to lead supply chain finance division

ITFA launches Swift short-term trade loan template

Scaling up digital trade: TradeTrust launches Model Terms for eBLs

GTR Leaders in Trade: The shortlist

Lloyds Bank and fintech Mercore have begun using digital negotiable instruments (DNIs) to carry out international trade transactions, which the lenders say are the first of their kind to be completed between two financial institutions.

UK-headquartered Lloyds says the initial transactions, executed in September, are the first node-to-node DNI transactions between two financial institutions carried out using an initiative created in 2020 by the International Trade and Forfaiting Association (ITFA).

Advocates of DNIs, which are usually electronic bills of exchange and bills of lading, argue the instruments are a more efficient and secure way for companies to conduct trade and manage working capital compared to traditional invoice-based supply chain finance, for example.

Lloyds says the September transactions were for the shipping of sugar from an exporter in the Americas to a buyer in the UK.

Mercore created a digital bill of exchange using Enigio, the Swedish fintech, which was drawn by the exporter and transferred via Enigio’s trace:original solution to Lloyds, and digitally accepted by the importer.

Following acceptance by Lloyds, Mercore purchased the bill of exchange from the exporter as pre-payment, with the amount to be repaid at a later time.

The transaction is not a one-off, and Mercore and Lloyds are using the DNI solution for “transactions as part of this flow” between the two clients, a Lloyds representative says, adding the pair are “also looking at what future opportunities they can leverage using this structure together between their respective clients”.

Lloyds declined to name the buyer and seller, or the value of the transactions.

The lender says the transaction breaks new ground because prior DNI deals “have involved only one financial institution interacting with both the importing and exporting party”.

Anthony Wadsworth-Hill, Mercore’s co-founder, says the company “expect[s] 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”.

The deal also “allowed for faster execution” and swifter payment for the exporter compared to paper processes, according to the bank.

Mercore has been a frequent advocate for the use of DNIs such as digital bills of exchange, carrying out what it described as the first UK transaction using the instrument in 2023, followed by the first such transaction in Africa in May this year.

Wadsworth-Hill said at the time that the exporter in that transaction was paid within 24 hours.

ITFA’s DNI initiative is designed to encourage use of the financing instruments by setting out common standards and principles. The push has also been boosted by the adoption of the Electronic Trade Documents Act in the UK.