The new arrangement is designed to help banks operate card transactions while keeping cash collateral.
Currently, the worldwide known card processor counts for 29 member banks in Bangladesh and a total collateral of around USD 25 million. However, collaterals for both domestic and cross-border settlement obligations are provided through USD-denominated standby letters of credit (SBLC) issued by the international bank in favour of Visa and, in exchange for the SBLC facility, member banks of Visa provide a commission to the foreign bank, which then makes the payment to a merchant if the card issuer fails to repay the seller.
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