BB launches bank-intermediated framework for cross-border digital payments

Bangladesh Bank (BB) has introduced a bank-intermediated framework for processing cross-border digital payments, aiming to modernise the country's payment infrastructure, facilitate outward remittances and promote digital financial inclusion.

The central bank issued a circular on Wednesday through its Foreign Exchange Policy Department (FEPD), allowing Authorised Dealers (ADs) to collaborate with foreign payment service providers, digital platforms and online payment gateway service providers (collectively termed CDPSPs) to facilitate cross-border digital payment services.

Under the new framework, ADs will be able to facilitate the opening of digital wallets and stored-value accounts, known as Digital Value Accounts (DVAs), for individuals in whose favour foreign exchange is released.

According to the circular, each DVA must be linked to a Master DVA, or settlement account, maintained by the concerned bank and will operate strictly as a sub-account, ensuring full visibility and control of all transactions by the bank.

The framework allows resident Bangladeshis to use DVAs for private, medical and official travel expenses. DVA holders will also be able to make cross-border online payments of up to $300 per transaction.

The accounts may also be used to pay for IT-enabled services, visa processing fees, membership subscriptions and online hotel bookings.

For businesses, up to three senior officials of eligible entities will be allowed to use DVA facilities against Export Retention Quota (ERQ) accounts for legitimate foreign business expenses.

To ensure transparency and regulatory compliance, banks will be required to maintain mirror ledgers of all DVA transactions and establish real-time system integration with their partner CDPSPs.

The circular said any unutilised balances in DVAs will remain under the control of the banks and will be subject to repatriation or adjustment in accordance with existing foreign exchange regulations.

Bangladesh Bank has instructed all ADs to maintain robust Know Your Customer (KYC), Customer Due Diligence (CDD), and Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) measures while providing the services.

Banks intending to offer outward remittance services under the new framework must obtain prior regulatory acknowledgement from Bangladesh Bank's head office.