Written by Dr Nasrin Sheely
The central bank’s recent circular introducing international card-based ticket purchases within Bangladesh marks a pragmatic shift in managing travel-related foreign exchange flows. For years, outbound travellers have argued that purchasing air tickets in Bangladesh often costs more than buying the same ticket abroad or online. As a result, many travellers had no option but to use informal payment channels, rely on acquaintances abroad, or purchase tickets at premiums. The new circular aims to eliminate such inconveniences by restoring competitive pricing and enabling transparent foreign exchange settlements.
The circular opens by acknowledging a key concern: travellers frequently face difficulty in securing competitive fares due to the absence of international card-based payment options. By authorising resident Bangladeshi nationals—holding valid visas where necessary—to use international cards for ticket purchases from airlines operating in Bangladesh, the central bank attempts to bring the local ticketing environment closer to international norms.
A major feature of the circular is the mechanism for acquiring ticket sale proceeds through local authorized dealer (AD) banks. The directive requires all ticket payments initiated through international cards to be acquired by AD banks operating within Bangladesh. This means that even if a ticket is purchased using a foreign card, the sales proceeds will ultimately flow through the domestic banking channel. This provision ensures transparency, accurate reporting of foreign exchange earnings, and improved oversight. It also prevents the outflow of payments through informal routes, which has historically caused leakages and weakened the overall foreign exchange management regime.
In a more innovative move, the circular allows refill or replenishment of international cards issued under travel entitlement to the exact amount used for ticket purchases. This is perhaps the most industry-appreciated clause. Under the existing travel entitlement rules, international cards have predetermined annual spending limits. When a traveller purchases a ticket using an international card, the amount used is deducted from the total annual entitlement. The new rule enables the cardholder to refill the card by the exact amount used, but only after the airline’s acquiring bank has fully settled the transaction with an AD in Bangladesh. This condition ensures that the refill privilege does not create opportunities for misuse or double counting of entitlements. For travellers, this clause provides a major relief: ticket purchases will no longer eat into their annual travel quota, allowing them to use their card more freely for genuine overseas travel expenses.
Another important dimension of the circular relates to the crediting of ticket sale proceeds to foreign currency accounts maintained by foreign airlines with local AD banks. These accounts fall under general authorization, meaning that airlines may operate them without seeking case to case approval. Balances in such accounts can be used for remitting eligible surplus earnings abroad in line with existing regulations. The circular increases convenience for foreign airlines by streamlining their revenue management processes within Bangladesh. By contrast, locally owned airlines are not allowed to retain ticket proceeds in foreign currency. They will convert these earnings into Taka upon receipt. This differentiation reflects the principle that foreign airlines require access to foreign currency for repatriation of legitimate commercial earnings, while locally owned airlines primarily incur domestic costs and therefore operate under a separate regulatory logic.
Stakeholders in the aviation and payment ecosystem have welcomed the initiative, viewing it as a long-awaited step toward aligning Bangladesh’s travel payment environment with global practices. Airlines, card issuers, and customers all stand to benefit. Competitive pricing should emerge naturally once international cards are permitted for direct purchases. Travellers will be able to access online promotional fares, dynamic pricing, and other global booking options that were previously difficult to access from within Bangladesh.
However, the implementation of the circular is contingent on several practical factors. The most significant challenge pertains to the requirement that ticket sale proceeds need to be acquired through AD banks operating in Bangladesh. If foreign airlines decline to engage local acquiring banks—either due to cost concerns, internal global payment policies, or limited operational presence—the circular may not yield the intended results. Many airlines rely on globally centralized acquiring arrangements with partner banks abroad. These arrangements integrate ticketing, accounting, settlement, and reconciliation functions across multiple jurisdictions. Convincing them to appoint local acquiring banks involves operational restructuring and additional compliance obligations.
If an airline insists on using an overseas acquiring bank, the domestic card transaction may technically be possible, but the proceeds would not be captured by the local banking system, violating the terms of the circular. Therefore, for the directive to be truly effective, the central bank may need to consider an alternative mechanism. One possible approach is to allow airlines to settle through overseas acquiring banks while requiring that the proceeds will be reported in their local sales statements and subsequently adjusted against allowable outward remittances. Under such a model, airlines could continue using their global settlement systems, but the foreign currency value of the transaction would be treated as if it were earned locally and adjusted during repatriation of surplus funds. This would preserve regulatory oversight while eliminating the operational burden of appointing local acquiring banks.
A parallel issue relates to locally owned airlines. The current circular requires them to encash their foreign currency earnings upon receipt, whereas foreign airlines may hold balances in foreign currency accounts. This asymmetry, although consistent with standard regulatory principles, creates challenges for local airlines that operate international routes. They incur a portion of their expenses abroad—landing fees, ground handling, fuel, crew accommodation, training, and lease payments. If all their ticket proceeds are required to be converted into Taka, they will subsequently remit foreign currency for overseas obligations, often encountering approval delays. Allowing locally owned airlines to retain a portion of their foreign currency earnings—say, a specified percentage or up to actual overseas expenses—would strengthen their operational resilience.
The circular’s focus on capturing foreign exchange earnings through regulated channels aligns with the central bank’s broader efforts to strengthen currency management. In recent months, regulatory authorities have adopted a series of measures aimed at reducing pressure on the foreign exchange market, curbing informal transactions, and increasing transparency in cross-border flows. In this context, facilitating international card payments for air tickets reflects a recognition that rigid payment restrictions often push consumers toward informal channels. When legitimate transactions are made easier, compliance naturally increases.
Another dimension worth noting is the potential impact on the shadow market for foreign currency. By enabling direct international card payments for ticket purchases, the circular indirectly reduces the incentive to source foreign currency from unofficial markets for travel-related expenses. This strengthens formal market turnover and contributes to greater foreign exchange discipline. The refill option further supports this by ensuring that the travel entitlement framework remains consumer-friendly without compromising oversight.
For full realization of the policy’s benefits, coordination between banks, airlines, payment processors, and regulators is essential. AD banks should prepare updated acquisition systems, reconciliation procedures, and reporting mechanisms. Airlines should reassess their payment supply chains to ensure compliance. Card issuers should update operational guidelines and customer communication.
The circular marks a thoughtful balance between liberalization and control. It acknowledges the practical needs of travellers and the operational realities of airlines while maintaining a firm regulatory grip on foreign exchange flows. Its success will depend largely on implementation and adaptability. If challenges such as foreign airlines’ reluctance to engage local acquiring banks can be addressed through alternative models—like allowing adjustments through repatriable surplus—the framework will be both workable and beneficial. Similarly, offering local airlines limited foreign currency retention for genuine overseas expenses would help build a more equitable and sustainable aviation ecosystem.
The reform is timely, but its impact will depend on supportive supplementary decisions. With thoughtful follow-up and collaborative execution, the initiative can become a model for pragmatic and balanced policy making—where consumer convenience, market competitiveness, and foreign exchange integrity reinforce each other to promote a modern, efficient, and transparent aviation industry in Bangladesh.
