Bank Payment Obligation or Order

From Open Risk Manual


Bank Payment Obligation or Order. (BPO) It is an inter-financial instrument to secure payments against the successful matching of trade data.

The BPO offers the benefits of a letter of credit in a digital environment, without the drawbacks of manual processing associated with the traditional trade finance instruments. Using SWIFT's trade services utility (TSU) or an equivalent transaction matching program, a BPO is an irrevocable undertaking given by one financial institution to another financial institution that ­payment will be made on a specified date after a specified event takes place.