By Adolf
Sri Lankan banks are quietly profiting from a practice that has gone unchecked for far too long — adding unjustified margins of up to 10% on foreign currency transactions made through credit cards. This practice, particularly visible in the case of American Express with a staggering 10% margin, and Mastercard and Visa with margins ranging from 5% to 8%, is nothing short of a rip-off of ordinary retail customers. It is a silent tax on consumers, imposed by the banks and tolerated by a Central Bank that appears to have lost touch with the realities faced by the public.
While the Central Bank of Sri Lanka (CBSL) continues to host events, publish reports, and celebrate its so-called achievements, millions of cardholders are being penalized every time they use their credit cards for legitimate online or overseas transactions. The additional “foreign exchange conversion margin” — which banks claim covers exchange rate volatility and operational costs — is grossly excessive and far beyond international norms. In most developed markets, central banks and financial regulators strictly cap these margins at 1–2%, ensuring that consumers are treated fairly and transparently.
In Sri Lanka, however, the story is different. The banks, emboldened by regulatory inaction, have turned forex-related card transactions into a lucrative profit centre. The irony is that they would never dare to impose such steep margins on corporate clients or large exporters. Those customers are better informed, have bargaining power, and can access foreign exchange directly through market mechanisms. Retail consumers, on the other hand, are easy targets — their small, scattered transactions go unnoticed, and the extra costs are buried in complex exchange rate calculations that few can decipher.
The result is a deeply unfair two-tier system: one set of rules for powerful corporates, and another for ordinary citizens. Every time a Sri Lankan family pays for an online course, books a hotel abroad, or subscribes to an international service, they are effectively being charged 10% more than what the exchange rate justifies. This is not only anti-consumer but also economically regressive. It discourages legitimate spending, erodes trust in the banking system, and fuels resentment towards institutions that are supposed to protect the public interest.
The CBSL cannot continue to look the other way. As the regulator of the financial system, it has both the authority and the duty to stop this practice. The Central Bank’s silence amounts to tacit approval, allowing banks to report inflated profits at the expense of the very customers they are meant to serve.
If Sri Lanka aspires to build a modern, fair, and transparent financial system, it must start with basic consumer protection. The CBSL must immediately issue clear guidelines capping foreign exchange conversion margins for credit card transactions at international norms. Accountability must replace complacency. The time for half-measures is over — retail customers deserve fairness, transparency, and respect, not exploitation disguised as policy.
