Bangladesh Bank reverses new credit card rules on online purchases

Bangladesh Bank has waived a new requirement for an authorisation form for every online purchase from abroad by international credit card.

News Deskbdnews24.com
Published : 24 Nov 2019, 12:35 PM
Updated : 24 Nov 2019, 01:19 PM

The central bank issued a notice on Sunday after it came under intense criticism for introducing the so-called OTAF, or online transaction authorisation form.

The authorities had introduced a new set of rules to stop illegitimate online payments to participate in gambling or stock trading.

The waiver aims to “bring further simplification to online transactions”, according to the latest notice.

The central bank has advised banks to maintain “necessary arrangements to guard against illegitimate online payments abroad” by international credit card from Bangladesh.

Participation in online casino or gambling, forex or stock exchanges and purchases of cryptocurrency or lottery tickets and goods or services by way of credit card payment will raise red flags.

The dealers must “strictly” observe standards to prevent money laundering and terror financing, and to obtain information about the identity and address of the customers, the central bank said.

Regulatory compliance involving duties or taxes applicable to the transactions must also be ensured, according to the notice.

After the new rules had been introduced, bankers and customers slated the steps as 'impractical' and ‘time-consuming’.

The authorities should have discussed the issue with banks before issuing the rules, they added.

The central bank then called a meeting with bank executives and representatives of Bangladesh Association of Software and Information Services or BASIS last week to iron out the issues tied to the rules.

BASIS members are allowed to spend up to $30,000 per year but the new rules would affect the business, Mushfiqur Rahman, vice president of BASIS, had said.

A customer had to fill up the online transaction form and submit it either through a mobile app, an internet platform or as a hard copy before purchasing goods or services online by international credit card, according to the previous circular issued by Bangladesh Bank.

The respective bank would then scrutinise the form and activate the credit card if no irregularity was found. The credit card would be deactivated automatically once the transaction was complete.

The technical part to connect OTAF submission system to the mobile app and internet requires time. The banks could not prepare them for it as there was no prior directive for them. Therefore, the online transaction using international credit card suddenly turned manual from digital.