Bangladesh Boosts IT Earnings with PSP Integration

The Bangladesh Bank has now allowed foreign income from the information technology (IT) sector to be brought into the country through local Payment Service Providers (PSPs). PSPs primarily provide “e-wallet” services and operate based on agreements with internationally recognized online transaction service providers.

This decision is expected to reduce costs associated with repatriating earnings from IT outsourcing. According to the central bank, “This opportunity will enable PSPs to facilitate the easy transfer of foreign income in the IT sector.”

Previously, IT sector earnings could only be brought in through banking channels and Mobile Financial Service Providers (MFSPs). On Sunday, the central bank’s Foreign Exchange Policy Department issued a circular announcing this policy change.

As per the Bangladesh Bank website, there are currently 18 companies providing PSP services in the country. An official from the central bank stated, “IT sector’s small-scale foreign earnings can now be repatriated with the help of online payment gateway service providers, digital wallet providers, or aggregators.”

Another official explained, “Several banks already handle such transactions. Although the number of transactions is high, the amount per transaction is relatively small. This will allow smaller earnings to be repatriated more conveniently through PSPs.”

In September 2023, to address the ongoing dollar shortage, Bangladesh Bank permitted PSPs to handle remittance inflows. Earlier, on February 10, 2021, IT sector earnings could be brought into the country through agreements with online payment gateway service providers, digital wallet providers, or aggregators. This latest policy extends the same convenience to locally licensed PSPs to facilitate the repatriation of IT-related earnings further.

Regarding the updated policy, relevant officials noted that in 2011, Bangladesh Bank issued a policy allowing authorized dealer banks to repatriate small-scale service sector earnings through agreements with foreign online payment gateway service providers. “Several banks manage these earnings. While the number of transactions is high, the monetary value per transaction is low. The new move is expected to simplify repatriation of smaller earnings via PSPs,” they added.

Notably, PSPs act as third-party companies that assist businesses in accepting payments via credit cards, debit cards, cryptocurrency, or other electronic methods, working as intermediaries between consumers and retailers.