After observing how credit and debit cards are being misused for cross-border transactions that, in terms of risk profile, are driven more by business than by personal needs, the central bank tightened the restrictions on their use.
The wealthy and business class continued to utilise these premium credit cards, which a number of commercial banks had issued along with incentives for their use in the past, for commercial purposes as opposed to being required for use when travelling to other nations.
According to the SBP circular, it has been determined to set an annual maximum of $30,000 per person on card-based cross-border transactions in order to ensure the responsible use of cards, including virtual cards.
The year will begin on November 1 for the purposes of this circular, although the cap for the current year will be determined as of the date this circular was issued. The circular also said that this cap would apply to any anyone working in the financial sector.
Commercial banks have been advised to properly conduct customer due diligence at the time of onboarding or updating their risk profiles, and to properly account for their needs for cross-border card payments in those profiles.
Additionally, it is urged that the banks conduct a campaign to educate the public about the information contained in this circular and the fact that cross-border business payments made using personal credit cards are not permitted.
Banks are recommended to carefully follow these recommendations and make sure that all of its stakeholders are aware of them. Any violation of the aforementioned instructions may be dealt with in accordance with the relevant sections of the Foreign Exchange Regulation Act, 1947, and any monetary or administrative action may be taken against the offending ADs as necessary.