SBP Finally Allows Banks to Settle Foreign Card Transactions at Interbank Rates

In a major development likely to benefit credit card users, the State Bank of Pakistan (SBP) has allowed the settlement of credit cards issued by various banks through the interbank exchange rate with immediate effect till July 31, 2023, according to a circular issued by the central bank on Wednesday. According to the circular, the banking regulator allowed banks and financial institutions to purchase dollars from interbank markets for settlement of card-based cross-border transactions with International Payment Schemes (IPS) such as Visa and Mastercard. “It has been decided to allow authorized dealers to purchase USD from interbank for settlement of card-based cross border transactions with IPS,” the circular reads. It is pertinent to mention here that earlier, credit card settlements were done through the open market. However, now the settlement will be done from the interbank counter. In a statement, Exchange Companies Association of Pakistan General Secretary Zafar Paracha welcomed this move by the central bank. Paracha said that the move will bring down the open market USD rate by up to Rs. 25 and added that it will also help enhance the inflows of remittances.