Rebati Adhikari
March 27:
People in Nepal no longer have to rely on their friends or relatives abroad to sign up for Netflix to watch movies and TV shows, purchase things from Amazon or Flipkart, boost their posts in Facebook or Twitter for advertisements or book hotels before embarking into a vacation to Thailand or other countries just because they cannot make foreign currency payment online.
Now, banking institutions in Nepal are offering foreign currency (dollar) prepaid cards which you can use for the payment of online shopping or purchase.
Since this is the first time that banking institutions are introducing this facility in Nepal, there are some questions and confusions regarding dollar prepaid cards.
With the help of bankers and officials of the Nepal Rastra Bank (NRB), New Business Age addresses some of these questions and confusions that you might have about this facility.
 
What is a foreign currency prepaid card?  
Foreign Currency Prepaid Card, as suggested by its name, is a payment card issued by a bank to its clients to make payment in foreign currency. Since US Dollar is the world’s dominant foreign currency, most of these cards would be Dollar Prepaid Cards. Like a prepaid Sim card of a telecommunication company where you load credit and make phone calls from that card, you have to get the card from a bank and load cash on your account to shop online from this card. Commercial or development banks issue these dollar payment cards up to an annual limit of $500.
 
Is this new facility a really big thing?
It is, at least for those who had long been struggling to do online transactions or make payment in dollars or other foreign currencies from Nepal. Nepal Rastra Bank (NRB) has a restrictive foreign exchange policy or the central regulatory bank allows you to get or convert a limited amount of foreign currency to the public only under certain conditions. For example, when you are flying abroad, you can get foreign currency exchange up to a limit of $1,500 provided that you present an air ticket, visa and passport to a bank. The reason for the central bank making such a tight grip on foreign currency reserves is that they are considered a cushion for the country if it slips into a financial crisis or struggles to pay for its imports.  Due to the central bank’s restriction, people were prohibited from purchasing goods and services online by paying in foreign currency. With this new facility, people will be able to make payment from Nepal for online purchase of goods or services up to a certain limit.
 
Why did the central bank relax foreign currency payment restrictions?
The restrictive foreign exchange regulation had not stopped many people from doing online shopping or purchase of services and commodities from abroad as people were finding a way around the central bank’s restriction. But, many such transactions were not legal. Amid growing demands from the public for the relaxation, the NRB announced that it will allow banks to issue dollar prepaid cards last year through its monetary policy for the current fiscal year 2020/21. In line with the policy, it issued a circular to banking institutions last week allowing them to issue dollar payment cards with certain conditions and a value limit of $500 a year. Foreign exchange reserves surging to a record high level also make the central bank amenable to a suggestion of relaxation on online shopping by paying dollars or other currencies.

Where can I get one? How much does it cost?
As soon as the NRB paved the way for the issuance of dollar payment cards, some banks have already introduced their Dollar Prepaid Cards while others are also rushing to roll out their products.
Machhapuchchhre Bank Ltd, Nabil Bank Ltd and NMB Bank Ltd have already started issuing dollar cards in line with the central bank’s directive. Representatives of these banks say that any of their branches will facilitate the issuance of dollar prepaid cards.
While the NRB has not said anything about the charges banks are allowed to take from their customers, charges and fees for this facility may vary from bank to bank.  Banks charge subscription fees, reload fee, re-issue fee.
For example, Nabil Bank Ltd says it charges Rs 1,000 as subscription fee, Rs 500 as reload fee and $5 dollar as re-issuance fee. It’s card is valid for four years.
 
What are dollar prepaid card’s limitations and conditions?
Customers willing to take benefit of international prepaid cards are allowed to take prepaid dollar cards from a single bank only. NRB has set $500 as the limit per year beginning from the date the card is activated. However, those who have earnings on international currency will have higher limits. Foreign currency earnings from selling any services like from Google Ads can be deposited in this account.  If the deposited amount exceeds $5000, the amount will be transferred to users’ domestic or international bank accounts. Cardholders are restricted from making payments except for the online purchase of goods and services. These dollar cards will be allowed to make payments only for the international payment for online shopping of goods and services. Such cards can’t be used for transactions that result in capital gains. Neither can these cards be used to withdraw money from ATMs and POS machines.
 
What documents are needed to apply for this card?
To get the prepaid card, a client must have a Permanent Account Number (PAN) and have their Know-your-customer (KYC) updated account in a bank that provides this facility. Any individual, firm, company, or organization can get it by loading (converting) their domestic currency (Nepali rupees) into the foreign currency (US Dollar) from the banks.
If the customer wants to take a card without their name printed, it is issued on the same day of submitting the application. The card with the customer’s name printed will take three to four working days.
 
What will be the exchange rate?
The bank issuing the card will use the exchange rate of the day to load the cash in the card. Similarly, if any cardholder want the money that is due in the card, the bank will have to deposit the cash back into the cardholder’s account based on the exchange rate of the day when it has to be returned.
 
What if I acquire multiple cards from separate banks?
If anyone found to be acquiring more than one card or breaching any condition, s/he could face charges of misappropriation or deflection of foreign currency under the Foreign Exchange Regulation Act 2019. Applicants will have to make self-declaration that they have not acquired the dollar card from another bank. Similarly, banks will have to submit all monthly details of their cardholders to the Foreign Exchange Management Department of the NRB which helps the central bank to track all transactions made from dollar prepaid cards.