BPO – Bank Payment Obligation

A Bank Payment Obligation (BPO) is an irrevocable and independent undertaking of an Obligor Bank (the bank of the buyer/importer) to pay (or to incur a deferred payment undertaking and pay at maturity) a specified amount to a Recipient Bank (the bank of the seller/exporter) after a successful electronic matching of pre-agreed data sets (or acceptance of any mismatches) according to an industry-wide set of rules issued by the International Chamber of Commerce (ICC), the Uniform Rules for Bank Payment Obligations (URBPO). 

Parties involved:

• Obligor Bank: the bank that issues a BPO and is usually, but not always, the Buyer’s Bank.
• Recipient Bank: the bank that is the beneficiary of a BPO and is always the Seller’s Bank.