Credit card restrictions withdrawn

Bangladesh Bank has waived the need for using the Online Transaction Authorisation Form (OTAF) for foreign payments through international credit cards, backtracking on its earlier decision to tighten online transactions abroad.

The decision was taken to simplify online payments through credit cards, the central bank said in a circular issued on Sunday. The announcement was made after a meeting with banks and other stakeholders held at Bangladesh Bank. 

Although the meeting was originally scheduled to be held on Monday, the central bank suddenly rescheduled it in the face of pressure from senior government officials.

Previously, on November 14, Bangladesh Bank issued a circular making it mandatory for clients to fill up an online transaction form for all foreign transactions using international credit cards. 

It was intended to curb illegitimate transactions, but bankers criticised it as an anti-digitisation move that would hinder the e-commerce industry of the country. 

"To bring further simplification in online transactions, it has been decided to waive the OTAF formalities for online payments abroad made through international credit cards," reads the circular.

However, the central bank advised banks to safeguard against illegal online payments made through international credit cards, including online gambling, betting in casinos abroad, forex trading, buying scrips in foreign stock exchanges, buying cryptocurrencies, lottery tickets, etc.    

We welcome the revised decision because the OTAF is a complex process and would make it difficult for both customers and banks to comply with, said Syed Mohammad Kamal, country manager for Mastercard in Bangladesh.

However, boosting websites and Facebook page views using international credit cards is still restricted. 

"We raised the issue in the meeting, and the central bank assured us that it will solve this problem as well. A meeting is scheduled for Thursday to discuss this matter" he added.

The decision of waiving the use of OTAFs has saved the card business of the banking industry, said City Bank Managing Director Mashrur Arefin. 

According to the previous circular, international credit cardholders would have had to submit the form to their banks mentioning their names, card numbers, beneficiary names, amount of foreign currency being used and details of products and services to be purchased.

The banks would then activate the card, after due diligence. The foreign payment option would be deactivated immediately after completing the transaction.

"Banks will have to verify the executed online transactions by checking them against the declaration in the OTAF, and satisfy themselves regarding payment of applicable VAT, tax and duty for online purchase of goods and services from abroad using international cards," read the previous circular issued on November 14.

The move came after the discovery of some cardholders using their international credit cards to buy shares abroad. Such capital transfer is illegal under existing regulations.

Sources said some people were also using their international cards for online gambling.

However, instead of taking proper technological measures such as restricting the misuse of cards through introduction of purpose specific codes, the central bank directed that all international online transactions be first permitted through the OTAF. 

On Monday last week, a representative team from different private banks met senior central bank officials and requested them to reconsider the restriction on using credit cards for foreign transactions. 

Representatives from the Bangladesh Association of Software and Information Services (BASIS) also met Bangladesh Bank Deputy Governor Ahmed Jamal last Wednesday to request him to resolve the issue. 

Later, on Friday, State Minister for Information and Communication Technology (ICT) Zunaid Ahmed Palak in a Facebook post said that the restriction on card transactions will be relaxed soon, as the issue had come to the attention of the prime minister's ICT Affairs Advisor Sajeeb Wazed Joy.