BB formulates digital payment policies with quick refund, penalty provisions

The central bank has formulated policies to ensure the security of customers and businesses in the process of digital payments for online product and service sales, including procedures for refunds and penalties.

If a customer cancels an order after making a digital payment, he or she must be refunded within a maximum of three days. Simultaneously, the Bangladesh Bank may suspend or revoke the licence of any relevant Payment Service Operator (PSO), Payment Service Provider (PSP), or Mobile Financial Service (MFS) institution if they do not adhere to the policy accurately.

The Payment System Department of the Bangladesh Bank issued a circular to this effect on Tuesday.

The circular states that with the increasing popularity of digital payments in everyday transactions, digital payment methods are also being utilised for the settlement of transaction values. Therefore, in order to ensure the security, effectiveness, and ease of access for customers in digital payment systems, the "Merchant Acquiring and Escrow Service Policy, 2023" has been issued.

According to the circular, merchants will be categorised into three types in accordance with the policy. The first type is physical store-based merchants, the second type is online-based merchants, and the third type is those who operate both physical stores and online platforms.

The central bank stated that in merchant business operations and transactions, there is a risk of customer exploitation, money laundering, and fraud. Therefore, payment service providers (such as bKash, Nagad, Rocket, etc) or merchant acquirers must maintain certain information like the merchant's name, permanent and current address, national identification card, taxpayer identification number (TIN), personal retail account, digital business identification number, up-to-date trade licence (where applicable), certificate of incorporation and business identification number (BIN) (where applicable).

The acquirer institution will assess all merchants for risks at the end of each fiscal year within the following three months and prepare a report, presenting it if necessary to the management council. Merchants will be categorised into three groups based on the level of risk: high-risk merchants, medium-risk merchants, and low-risk merchants.

Acquirer institutions will regularly monitor the business activities of merchants. If a physical regular merchant (whose monthly transactions exceed Tk10 lakh) experiences a monthly transaction growth of more than 40 percent, they will be asked to provide an explanation. In applicable cases, a site visit will be conducted, and if the response is unsatisfactory, their transactions will be suspended.

Additionally, the monthly transaction growth rate for online regular merchants (whose monthly transactions exceed Tk10 lakh) will not be allowed to exceed 30 percent. The central bank also directed to keep the monthly transaction growth rate within 25 percent for online marketplaces.