Letters of credit can be revocable or irrevocable. Revocable letters of credit do not make a lot of sense, as they can be canceled after being issued, which means they do not fulfill the function of guarantee. Therefore, irrevocable letters of credit are more common.
Unconfirmed letter of credit. The bank issuing the credit will use a bank in the exporter's country to inform it of the letter of credit. This bank is called the advising bank who will act on behalf of the issuing bank, communicating the opening of the letter of credit, collecting the documentation, paying if applicable.
If that is all the advising bank does, the letter of credit is unconfirmed. A confirmed letter of credit is issued when the exporter requests, and the issuing bank confirms, that a bank in its country, either the advising bank or another bank designated by the payee, guarantees that the issuing bank will pay.
Depending on when the payment is made, this will be on demand when the documentation is delivered or at a later date following the delivery.
Transferable letters of credit are those in which the payee can specify other individuals who can share said guarantee and to whom the money will be paid. This is common if the exporter is just an intermediary or broker who is acting on behalf of other clients.
Another modality with similar aims is the back-to-back letter of credit, which is when the exporter-intermediary opens or orders a letter of credit with the guarantee from someone other than the payee.
The letter of credit can have a partial advance payment clause in favor of the payee before delivery of the documentation. If it is a red clause letter of credit it will be just upon receiving the funds or an endorsement. If it is a green clause letter of credit, ownership of the goods has to be proven.
Lastly, let's consider revolving letters of credit, which can be reused over a certain period of time.