MT 799

Definition

MT 799. It is a free format SWIFT message type in which a banking institution confirms that funds are in place to cover a potential trade.

This can also be used as an irrevocable undertaking, depending on the language used in the MT 799. It is not a promise to pay or any form of financial institution guarantee in its standard format. The function of the MT 799 is simply to assure the vendor that the buyer does have the necessary funds to complete the transaction. The buyer's financial institution sends a proof of funds via MT 799 with full financial institution responsibility. In it, it states to be ready, willing, and able to perform the trans action with the vendor's financial institution. This pre-advice is to engage the transaction, and for the first tranche, only the MT 799 is incorporated as part of the contract and the wording to be approved by the vendor.

The MT 799 is normally issued before a contract is signed and before a letter of credit or a financial institution guarantee is issued. After the MT 799 has been received by the vendor's financial institution, it is normally the responsibility of the vendor's financial institution to send a Proof of Product (POP) to the buyer's financial institution. At this point, the trade continues towards commencement.

The actual payment method commonly used is a documentary letter of credit, which the vendor presents to the issuing or confirming financial institution along with the transportation documentation. Once the financial institution confirms the documentation, the vendor is paid. An alternative method is to use a financial institution guarantee in place of a letter of credit. It is at the vendor's discretion which method of payment is used.