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Dhaka Tribune

Bangladesh Bank restores normal use of International Cards following criticism

Earlier on November 14, the FEPD had introduced mandatory submission of Online Transaction Authorization Form (OTAF) for cardholders to obtain prior permission from the card-issuing bank over the necessity and legitimacy of each transaction, before the use of the cards

Update : 24 Nov 2019, 07:21 PM

The Bangladesh Bank (BB) has reopened the normal use of International Cards (ICs) in order to ensure cardholders' access to finance for online payment.

In the latest order, the BB's Foreign Exchange Policy Department (FEPD), however, advised the Authorized Dealers (ADs) to remain vigilant to prevent illegitimate transactions like payments for participating in online casinos or gambling, trading in foreign currency and stock exchanges, purchase of cryptocurrencies, lottery tickets and the purchase of goods and services originated in Bangladesh.

Earlier on November 14, the FEPD had introduced mandatory submission of Online Transaction Authorization Form (OTAF) for cardholders to obtain prior permission from the card-issuing bank over the necessity and legitimacy of each transaction, before the use of the cards.

On Sunday, the FEPD issued a fresh circular instructing AD for compliance on exemption of the November 14 (2019) directive in regard to mandatory submission of OTAF before use of cards in online payment.  

"To further simplify online transactions, it has been decided to waive OTAF formalities for online payments abroad through ICs," reads the fresh circular, signed by FEPD general manager Mohammad Khurshid Wahab. 

Contacted over phone, Khurshid told Dhaka Tribune last evening that only the mandatory provision of submission of OTAF was withdrawn. "Our objective was not to disrupt online payment facilities extended by cards except for that of illegitimate transactions," he said.

In the November 14 circular, the FEPD had directed that: "Cardholders shall, for online payment through ICs, submit OTAF to the ADs stating payment details for approval on the proposed transaction. Upon being satisfied about legitimacy of the proposed transaction, the ADs will activate the card and after the completion of permitted transactions, the card's transaction facility will be deactivated."   

The move from BB drew widespread criticism from different sections including Bangladesh Association of Software and Information Services (BASIS), travellers, people looking for healthcare services abroad, students and online shoppers and other major user of ICs. 

It had also garnered disappointment among thousands of outsourcing operators in Bangladesh.

However, the withdrawal of the OTAF formalities came following a meeting of all of the stakeholders including BASIS at the central bank on Sunday.  

Welcoming the BB decision, BASIS president Syed Almas Kabir said the withdrawal of the OTAF formalities would reopen the access to finance for BASIS members and others to pay online through cards.

"After the imposition of the embargo on online payment using cards and mandatory submission of OTAF, we told the central bank that it would disrupt the activity of the entire outsourcing industry. We told them (central bank) that submission of OTAF will not be possible practically for the users," he said, adding that: "We are happy that the BB lifted the OTAF provision."

Heads of card divisions of the banks also joined the meeting.

According to previous BB circulars, the BASIS members are allowed to spend up to $30,000 in online payments in a year. The online payment provision for others is $1,000 in addition to travel quota provision for individuals of $12,000 for a year.

Meanwhile, the guidelines for Foreign Exchange Transactions 2018 permits ADs to allow their cardholders to use cards for online payments not exceeding $300 or its equivalent amount in a single transaction against legitimate purchase of items or goods and services (such as downloadable application software, e-books), magazines, newspapers subscription fees from reputed and reliable sources abroad. 

There is no credible source to determine the exact numbers on debit and credit cards in Bangladesh. But the central bank has indicated that there are about 10 mn debit cardholders and 1 mn credit cardholders. The cumulative annual transactions of those cards stood at around Tk1,700 cr in 2018, industry insiders suggest.

The central bank began allowing online transactions in 2013 and permitted the purchase and sale of goods and services online using international credit cards. 

Different estimates put the number of freelancers in the country to be around 0.5 million while export earnings from software and information technology-enabled services in Bangladesh stood at $800 mn in 2017. 

The government targets to increase the income to over $1 billion by this year, and $5 billion by 2021.

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