Why are Pakistani banks charging high dollar rate on credit card transactions?

A recent announcement by Meezan Bank, Pakistan’s first Islamic banking institution, about the exchange rate has sparked an outrage on social media, with many customers venting their anger on the bank and vowing to stop using its services.

The development comes at a time when the Pakistani currency has gone into free fall against the US dollar. This situation has created dollar shortage in Pakistan and now banks are buying high-demand currency from open market to make payments.

Amid the shortage, several money exchange companies are offering the foreign currency Rs 25-30 above the market rate.

In a recent post, Meezan Bank said, “We would like to inform you that Banks can only settle Debit/Credit Card transactions on international merchants/websites by purchasing dollars from the open market. Hence, the conversion rate on these transactions is applied according to the prevailing open market rate, which may differ from the rate displayed on the international merchant website.”

With the recent announcement, Meezan Bank customers are charged a conversion rate of Rs250 or above, forcing many customers to take to social media to express their anger.

“This is not how banks usually operate. This means govt has restricted trading in inter bank market to show dollar is stable. For every other thing, banks will go to open market to purchase dollars. Or Meezan Bank here is just lying. And extorting money from consumers,” an angry user tweeted on Friday.

Others called it a disaster, saying dollar is expected to reach Rs 300.

Meezan Bank @MeezanBankLtd has started charging it’s customers OPEN MARKET rate for dollar payments. Meaning they are buying dollars from the open market and making payments.

This is officially an EFFING disaster.

Expect dollar to reach Rs 300.
میرے مُنہ میں خاک

— Mir Mohammad Alikhan (@MirMAKOfficial) December 30, 2022

Another user wrote, “Meezan Bank is overcharging 10 pecent extra fraud tax along with other mention 5.5% tax, so accumulated 15.5% huge tax by Meezan, All other bank charging 5.5% only."

Here’s how other people complained about the recent move of Meezan Bank.

Meezan Bank has yet to respond to the criticism on social media.

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