Implementing URDTT - Buyer side view

In implementing URDTT (Uniform Rules for Digital Trade Transactions), validation and approach are essential to ensure compliance, data integrity, and smooth transaction processing. Here's a step-by-step explanation of the approach to implementing URDTT, focusing on validation and contract creation from the buyer's perspective:

1. Validation in the URDTT Framework

Purpose of Validation: URDTT ensures that all electronic records, terms, and conditions conform to the predefined Digital Trade Transaction (DTT) requirements. This includes ensuring authenticity, accuracy, and compliance with the DTT terms between the buyer and seller.

1.1 Data Integrity: Electronic records must be validated for authenticity and data integrity, meaning the seller's information must match the agreed terms in the DTT. This involves verifying that all conditions meet the required payment obligations.

1.2 Electronic Record Requirements: The URDTT requires specific data elements in electronic records, such as delivery confirmations, invoices, or bills of lading, to validate the fulfilment of contract terms.

2. Approach to Implement URDTT from the Buyer's View

The buyer's approach in implementing URDTT involves careful contract creation, outlining conditions for validation, and specifying criteria for fulfilment. Below is a typical approach broken down into key stages:

2,1. Contract Creation and DTT Setup (Buyer's Perspective)

Objective: Define the terms and conditions under which the buyer agrees to release payment to the seller and establish specific validation criteria for each condition.

2.1.1????? Contract Terms Definition:

2.1.1.1 The buyer and seller create a digital trade contract (DTT) specifying the product details, delivery conditions, payment terms, and necessary documentation.

2.1.1.2 Payment may be conditioned upon receiving specific documents like a bill of lading or inspection certificate.

2.1.2 Validation Criteria Specification:

2.1.2.1 . Validation criteria are agreed upon to authenticate submitted documents. This includes data fields, acceptable formats, and required electronic signatures.

Examples: For machinery, validation criteria could include the serial number, inspection details, and shipping details in the electronic record.

2.1.3 Payment Obligation Setup:

2.1.3.1 Payment may be conditional (requiring certain documents) or unconditional. In this case, the buyer sets a conditional Payment Obligation (PO), which will convert to an unconditional PO upon meeting the conditions.

2.2. Submission and Initial Validation of Electronic Records

Objective: Ensure all submitted documents align with the agreed DTT conditions and contain all required data.

2.2.1????? Document Submission:

2.2.1.2 The seller submits digital documents (e.g., a bill of lading and an inspection certificate).

2.2.2 Initial Compliance Check:

2.2.2.1 The buyer's system automatically checks if the submitted documents match the predefined conditions in the DTT (e.g., the machinery's serial numbers match the details in the inspection certificate).

2.2.3 Authentication Verification:

2.2.3.1 Digital signatures on submitted records are verified to ensure document authenticity and reduce fraud risks.

2.3. Advanced Compliance Checks and Confirmation

Objective: Conduct a thorough document data validation and ensure compliance with international trade requirements.

2.3.1 Compliance Validation:

2.3.1.1.The system automatically cross-checks details within each document, comparing values such as delivery date and condition status against the terms in the DTT.

2.3.2 Regulatory and Fraud Compliance:

2.3.2.1 The buyer's bank (FSP) system scans for compliance with international trade regulations, such as checking sanctions lists and ensuring no fraudulent data.

2.4. Transition of Payment Obligation

Objective: Upon successfully validating all electronic records, the Payment Obligation is updated from conditional to unconditional, authorising payment.

2.4.1????? Conditional to Unconditional PO Transition:

2.4.1.1 Once all conditions are met, the PO automatically transitions to unconditional status.

2.4.1.2 The buyer's bank is then authorised to release payment per the DTT terms.

2.5. Payment Release and Completion

Objective: Finalise the transaction, release payment to the seller, and close the DTT.

2.5.1????? Payment Execution:

2.5.1.1 The bank releases funds to the seller.

2.5.1.2 The system generates and archives a digital confirmation of payment, which is accessible to all parties.

2.5.2 Notification of Completion:

2.5.2.1 All parties receive a digital notification confirming the transaction's completion and a detailed record of compliance and document validation.

2.6. Flow Diagram: URDTT Implementation from the Buyer's View

Explanation of Diagram Stages

2.6.1????? Contract Creation (DTT): The buyer and seller establish a DTT, specifying required electronic records, validation criteria, and conditions for a conditional PO.

2.6.2????? Document Submission: The seller submits digital documents according to DTT requirements, initiating the validation process.

2.6.3????? Initial Validation Checks: Automated systems verify document completeness and confirm authenticity through digital signatures.

2.6.4????? Advanced Compliance Checks: The document content is subject to detailed compliance checks, including fraud prevention and regulatory compliance.

2.6.5????? Payment Obligation Transition: After all documents meet DTT conditions, the PO converts from conditional to unconditional, triggering payment release.

2.6.6????? Payment Release: The buyer's bank transfers funds to the seller, completing the financial transaction under the DTT terms.

2.6.7????? Completion Notice: A digital notification confirms the completion of the transaction, closing the DTT.

3. Conclusion: Validation and Implementation Outcome

Through this approach, the buyer ensures compliance with contractual terms, reduces manual oversight, and mitigates fraud and error risks. The automated validation process minimises disputes, provides faster transaction cycles, and allows for secure, compliant trade transactions under the URDTT framework.