PSO Policy Proposed to Ensure Accountability in Payment Systems

Bangladesh Bank has published a draft regulation titled “Payment System Operator (PSO) Regulation, 2025” on its official website to ensure legal and financial accountability of entities operating payment system services in the country. The proposed regulation will be aligned with the “Payment and Settlement Systems Act, 2024.”

To gather public opinion, feedback on the draft has been invited until 18 November. Following stakeholder consultations, a committee will finalize the regulation.

The 255-clause draft categorizes PSOs into five groups: (1) Digital Merchant Acquiring and Merchant Acquiring Services, (2) Payment Switching Services, (3) ATM/CRM Acquiring Services, (4) Payment Initiation Services, and (5) Card Scheme Services. For the first category, the minimum capital requirement for digital services is set at BDT 1 crore, and if digital services include physical components, the amount will double. Additionally, BDT 10 crore will be required for payment switching and ATM/CRM acquiring services, while payment initiation services will require BDT 1 crore, and card schemes will require BDT 5 crore.

The licensing procedure will take place in two stages. First, the applicant must pay BDT 50,000 for a No Objection Certificate (NOC). After that, a license fee of BDT 5 lakh must be paid, and operations must commence within 120 days of receiving the license.

Sponsor shareholders will not be allowed to transfer shares during the first five years without approval from Bangladesh Bank. Any charge imposed on customers must also be approved by the central bank. All transaction data must be retained for at least 12 years.

In the event of a major operational failure, the PSO must notify authorities within 24 hours. Any data breach or leakage must be reported within 72 hours.

According to the draft, each PSO must maintain sufficient balance in its TSA account at the end of each day to cover all outstanding merchant liabilities. If a shortfall occurs, the organization will be fined BDT 30 lakh or the prevailing Standing Lending Facility (SLF) rate (currently 11.50%), whichever is lower. The shortfall will also result in personal liability for directors, the CEO, and treasury officials. If the shortfall persists for more than 14 days, an additional BDT 10,000 will be charged per day.

To obtain a PSO license, an entity must be registered under the Companies Act 1994, and its Memorandum of Association must explicitly state payment service operations as a core purpose. The licensing process includes two stages: the initial NOC and the final license. The application fee is BDT 50,000, and the license fee is BDT 5 lakh. Licensed entities must start operations within 120 days.

Capital requirements will vary depending on service category, ranging from BDT 1 crore for digital merchant acquiring services to up to BDT 20 crore for ATM/CRM acquiring services. Additionally, merchant acquiring and payment initiation services must maintain effective capital equivalent to 0.3 percent of the average monthly transaction volume over the previous 12 months. For switching, ATM, and card scheme services, the rate is 0.1 percent.

Each PSO must have a board of at least five directors, two-thirds of whom must be non-executive. The board chairperson must also be non-executive. Board members must have a minimum of five years of professional experience, must not be loan defaulters, and may not hold executive roles in another PSO.

The CEO must have a bachelor’s degree and at least five years of experience in finance, payments, fintech, IT, or telecom, including two years in senior leadership. Appointment of the CEO will require Bangladesh Bank approval, along with background checks, educational verification, and a CIB report.

PSOs must verify KYC of all merchants and maintain written settlement agreements. Settlement of merchant payments must occur within five working days, and cash settlement is strictly prohibited.

ATM and CRM booths must be installed in secure and accessible locations. Downtime may not exceed 12 hours in urban areas and 24 hours in rural areas. Each PSO must operate a centralized monitoring system.

Every PSO must establish a comprehensive risk management framework covering liquidity, operational, custodial, fraud, and money laundering risks. The board will set risk tolerance levels, while management will ensure implementation and oversight.

Currently, PSO services in Bangladesh are provided by SSLCommerz, Surjomukhi Pay, AmarPay, PayStation, and IT Consultants. These organizations operate in merchant acquiring, ATM acquiring, and payment switching domains, but they are not authorized to issue e-money.