Banks can now offer cross-border transaction services through PayPal, Payoneer

Banks in Bangladesh have been allowed to offer services through international transaction providers such as PayPal and Payoneer by entering into agreements with them. The Foreign Exchange Policy Department of Bangladesh Bank issued a notification on Wednesday, introducing a 'bank-intermediary framework' for cross-border digital payment processing. The central bank said the initiative aims to facilitate international service-oriented trade, enhance digital financial inclusion and modernise the country's transaction framework.

Under the new framework, banks can jointly offer international digital payment facilities with foreign transaction service providers, digital platforms, online payment gateway providers and other legitimate transaction solution providers. These entities have been referred to in the guidelines as cross-border digital payment service providers.

Transactions will be conducted through digital wallets called 'Digital Value Accounts' (DVA). According to the guidelines, banks can assist in opening such stored-value accounts in the name of customers. However, these individual accounts will not be operated directly or independently; for security reasons, each account must be linked to a 'Master DVA' or settlement account under the respective bank. To ensure transparency, banks have been directed to maintain real-time monitoring and a parallel ledger in their systems. Any unused funds will remain under the direct control of the bank and must be refunded or adjusted as per rules.

Under this framework, individual customers, as well as merchants and freelancers, will be able to transact in foreign currency. Digital wallet facilities will also be available for the use of foreign currency under travel quotas for personal, medical or official purposes. A maximum of $300 per transaction will be allowed for small-scale international purchases or fee payments. Additionally, based on genuine needs, the facility can be used for membership fees, IT-related expenses, visa processing fees and online hotel bookings.

For exporters and e-commerce businesses, the facility will be available against Export Retention Quota (ERQ) and Resident Foreign Currency Deposit (RFCD) accounts. Up to three top officials of an ERQ account-holding entity can use DVA accounts for business expenses. Freelancers and e-commerce merchants will also be able to repatriate their earnings easily. Foreign nationals and tourists visiting Bangladesh will also be able to use this settlement facility for payments at local merchant points.

However, before launching the service, banks must obtain prior approval from the central bank's Foreign Exchange Policy Department, with details of the institution, technical infrastructure and security arrangements. At the same time, they must comply with anti-money laundering and customer due diligence policies and submit regular transaction reports to Bangladesh Bank.