This article is authored by Somaiya Islam Mim, Associate, Mahbub & Company.
Bangladesh Bank has introduced a bank-intermediated framework for processing cross-border digital payments through authorised dealers in foreign exchange in Bangladesh (ADs). Issued on 29 July 2026, FEPD-1 Circular No. 25 (the Circular) refers to the existing foreign exchange regulations governing outward and inward remittances under current account transactions and introduces the framework in line with the stated objectives of promoting digital financial inclusion, facilitating cross-border trade in services and modernising payment infrastructure.
Under the Circular, ADs may collaborate with foreign payment service providers, digital platforms, online payment gateway service providers (OPGSPs) and other legitimate payment solution providers, collectively referred to as Cross-Border Digital Payment Service Providers (CDPSPs), for facilitating admissible cross-border digital transactions. Such arrangements remain subject to compliance with foreign exchange regulations, AML/CFT requirements, tax laws and reporting obligations.
A Bank-Intermediated Model for Cross-Border Payments
Under the Circular, ADs may establish standing arrangements with CDPSPs for facilitating admissible cross-border digital transactions, subject to compliance with foreign exchange regulations, AML/CFT requirements, tax laws and reporting obligations.
The Circular also permits ADs to facilitate the opening of digital wallets, stored-value accounts and similar payment instruments in the name of the individuals in whose favour foreign exchange is released. These instruments are referred to as Digital Value Accounts (DVAs) maintained with CDPSPs.
For settlement and routing, all transactions under the Framework are to be routed exclusively through ADs for settlement and foreign exchange execution. ADs are also required to ensure that no cross-border transaction under the Framework is executed outside the approved CDPSP arrangements and the established Master DVA framework.
ADs intending to provide outward remittance services under the Framework are required, prior to commencement of such services, to apply to the Foreign Exchange Policy Department-1 of Bangladesh Bank with detailed information on the relevant CDPSPs, operational structure, system integration arrangements and compliance frameworks for regulatory acknowledgement.
Digital Value Accounts and the Master Account Structure
The Circular permits ADs to facilitate the opening of digital wallets, stored-value accounts and similar payment instruments in the name of the individuals in whose favour foreign exchange is released. These instruments are referred to as Digital Value Accounts (DVAs) maintained with CDPSPs.
All DVAs maintained with CDPSPs are required to be mandatorily linked to a Master DVA or settlement account maintained by the respective AD with the concerned CDPSP. Individual DVAs are required to operate strictly as sub-accounts under such Master DVA structures and must not function as standalone or independently funded accounts outside the purview of the AD.
ADs are required to establish real-time or near real-time system integration with CDPSPs to ensure full visibility of balances, transactions and usage patterns of all DVAs. A mirror ledger of all DVA transactions must also be maintained within the AD’s systems to enable continuous monitoring, reconciliation and regulatory reporting.
ADs must ensure that all transactions conducted through DVAs comply with applicable foreign exchange regulations, prescribed limits and declared purposes. They must also implement adequate controls to restrict unauthorised use, enforce transaction caps and maintain complete audit trails. Any unutilised balances held in DVAs remain under the effective control of the AD and are subject to repatriation, reversal or adjustment in accordance with prevailing foreign exchange regulations.
Permissible Cross-Border Digital Payments
The Circular identifies the permissible transactions and usage of DVAs under the Framework, including travel-related foreign exchange releases for eligible resident Bangladeshi nationals, DVA-based facilities linked to ERQ and RFCD balances, and specified online payments permitted under the applicable foreign exchange circulars. These online payments include cross-border online payments within the prescribed per-transaction limit, as well as payments for categories such as membership fees, IT-related expenses, visa processing fees and online hotel bookings, where the relevant requirements are satisfied.
The Role of Foreign Payment Service Providers
For foreign fintech and payment companies, the Circular may be relevant where they fall within the categories of foreign payment service providers, digital platforms, online payment gateway service providers or other legitimate payment solution providers participating as CDPSPs under AD-led arrangements. The relevance of the Framework will depend on the structure of the arrangement, the nature of the underlying transactions and compliance with the applicable foreign exchange, AML/CFT, tax and reporting requirements.
However, the Circular should not, by itself, be read as resolving all licensing or regulatory requirements applicable to foreign payment businesses providing Bangladesh-facing services. The regulatory treatment of a particular business model may depend on the nature and extent of the provider’s activities, the services offered to Bangladeshi users, the flow of funds and data, and the applicability of other Bangladesh laws and regulatory requirements.
The Circular principally places regulatory obligations on the AD. The AD is required to maintain the necessary monitoring and control arrangements, ensure that transactions comply with applicable foreign exchange purposes and limits, maintain relevant records and ledgers, and fulfil applicable reporting obligations.
Before commencing outward remittance services under the Framework, the AD is also required to obtain the necessary regulatory acknowledgement by submitting information to Bangladesh Bank regarding the relevant CDPSP, the proposed operational structure, system integration and compliance arrangements.
Foreign CDPSPs appear to be contemplated as participants under standing arrangements with ADs for facilitating admissible cross-border digital transactions. Their contractual and operational arrangements with the AD will therefore be important, particularly in relation to system integration, transaction data, settlement, reconciliation, audit trails, reporting, KYC/CDD, AML/CFT controls and compliance support.
In practical terms, the AD remains the principal Bangladesh-regulated institution for settlement, foreign exchange execution, monitoring, reporting and related compliance oversight under the Circular, while the CDPSP participates within the approved CDPSP arrangement and the established Master DVA framework.
Looking Ahead
While the Framework remains subject to Bangladesh’s existing foreign exchange and regulatory controls, it provides a structured framework through which AD banks may collaborate with CDPSPs for processing admissible cross-border digital transactions. The Circular may therefore be relevant for foreign payment service providers and fintech businesses seeking to assess Bangladesh-facing arrangements through AD-led structures.
The Framework is also relevant in the context of cross-border commerce involving digital platforms, online services and technology-enabled payment mechanisms. For banks, CDPSPs and other payment providers, the practical significance of the Circular will depend on how standing arrangements, system integration, settlement, monitoring, reporting and compliance requirements are implemented in practice.
