PayPal, Payoneer-like foreign payment services cleared for launch in Bangladesh
An initiative has been taken to introduce international payment and money transfer services provided by foreign transaction service providers such as PayPal and Payoneer in Bangladesh.
To this end, Bangladesh Bank has introduced a "bank-intermediary framework" for processing cross-border digital payments, under which banks in the country will be able to launch such services by signing agreements with companies like PayPal and Payoneer.
Bangladesh Bank said the initiative aims to facilitate international trade in services, expand digital financial inclusion, and modernise the country's payment infrastructure.
A circular to this effect was issued today, Wednesday, by the Foreign Exchange Policy Department of Bangladesh Bank.
Under the new framework, banks will be allowed to jointly offer international digital payment services with foreign payment service providers, digital platforms, online payment gateway service providers, and other legitimate payment solution providers.
The circular refers to these entities as cross-border digital payment service providers.
How the transactions will work
According to the Bangladesh Bank directive, banks will be allowed to facilitate the opening of digital wallets or stored-value accounts, called Digital Value Accounts (DVAs), in the names of customers.
However, these individual accounts will not be operated directly or independently. To ensure security, each account must be linked to a Master DVA or settlement account maintained under the respective bank.
To maintain transparency, banks have been instructed to ensure real-time monitoring through their systems and maintain a parallel ledger. Any unused funds must remain under the direct control of the bank and be refunded or adjusted in accordance with regulations.
What the service can be used for
Under the new framework, individuals, businesses, and freelancers will be able to make transactions in foreign currency.
The digital wallet facility can be used for foreign exchange transactions under personal, medical, or official travel quotas. It will also allow international payments of up to US$300 per transaction for small online purchases or fee payments. In addition, it may be used, based on genuine necessity, for membership fees, IT-related expenses, visa processing fees, and online hotel bookings.
Benefits for exporters and e-commerce businesses
The facility will be available against Export Retention Quota (ERQ) and Resident Foreign Currency Deposit (RFCD) accounts.
In the case of institutions holding ERQ accounts, up to three senior officials will be allowed to use DVA accounts for business-related expenses. Freelancers and e-commerce businesses will also be able to repatriate their foreign earnings to Bangladesh more easily.
Benefits for foreign tourists
Foreign nationals and tourists visiting Bangladesh will also be able to use the settlement facility to make payments at local merchant outlets.
Bangladesh Bank said that, before launching the service, banks must obtain prior approval or recognition from the Foreign Exchange Policy Department by submitting detailed information on their technical infrastructure and security framework.
They must also comply with anti-money laundering regulations and customer due diligence requirements and regularly submit transaction reports to Bangladesh Bank.