What Is a Confirmation Letter?


Quick Answer

According to U.S. Business Finance Corporation, a confirmation letter is a document sent between payment processing services and merchants to confirm deposits. Confirmation letters are also sent by financial institutions to confirm approved lines of credit.

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What Is a Confirmation Letter?
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Full Answer

Potential home buyers are often required to provide bank confirmation letters to sellers to ensure that they have access to the funds needed to finance or purchase the home. A confirmed letter of credit is a letter between two banks in which the second bank agrees to honor a credit line that was issued to a party by the original bank. The confirmed letter guarantees coverage by the second bank of any payments that are missed by the original party or issuing bank, in turn, minimizing financial risk for all parties.

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