Foreign currency transactions through card rise 172% YoY in Jan-Oct

Foreign currency transactions through cards maintained an upward trend in January-October this year, surging 172% year-on-year to Tk3,908 crore, amid a crunch of cash dollars.

Cardholders transacted a record Tk605 crore in October, according to central bank data released Tuesday, up from Tk586 crore in September.

In the first ten months last year, foreign currency transactions through cards stood at Tk1,434 crore, according to the Bangladesh Bank. This means, the cash dollar crunch drove up such transactions by Tk2,471 crore in January-October this year.

For dollar endorsement to cards, a number of banks were charging Tk106-Tk107 per dollar on Tuesday. However, the rate in the open market was Tk112.

The new surge, in other words, enabled more cardholders cutting through the cash carrying hassles. And eventually dollar spending from cards allowed them to pay less for greenback than the open market rate.

"Pent-up demand for foreign travel after two years of lockdowns continues to buoy card transactions. Besides, more and more people are getting used to it while travelling abroad," Ahsan H Mansur, executive director of the Policy Research Institute, told The Business Standard.

In the face of a supply crunch, the US dollar for the first time reached Tk100 in July. On 10 August, the US dollar hit record Tk120 in the kerb market, pressing the central bank for encouraging outbound travellers for foreign currency transactions through card instead of carrying cash.

According to the Bangladesh Bank, a maximum of $12,000 can be spent through the cards a year.

The dual currency cards allow hotel booking abroad and purchases of a certain amount from home.

There were around 3.20 crore debit and credit cards till October this year. Of those, there were around 2.92 crore debit cards and only 20.59 lakh credit cards. Debit cards account for the major chunk of the transactions.

Local transactions through card on rise too

Local transactions through card increased by 45% in January-October this year compared to the corresponding period last year. Cardholders spent Tk37,530 crore for local transactions in October, show official data.

According to the central bank, people spent Tk3.35 lakh crore in January-October this year through debit and credit cards. The amount was Tk2.31 lakh crore in the corresponding period last year.

Stakeholders say people are now getting used to transactions through mobile financial services or cards rather than cash. The uptrend indicates the country's progress towards a cashless society.