As a webmaster I often receive money from foreign ad companies like google adsense. I prefer to receive my money in the form of checks that I deposit in a foreign currency account.
A foreign currency account allows me to keep my money in US dollars, Euros or some other foreign country’s currency. Almost all banks in Pakistan support Foreign Currency or FC accounts. In this post I take a look at the advantages and disadvantage of opening a foreign currency account from the point of view of an Internet entrepreneur.
Opening the account
To open a bank account at any bank you will need to provide identification documents like a CNIC or a passport as well as proof of income. Unfortunately as a self employed webmaster or freelancer your not going to be able to provide these proof of income documents.
Connections in the banking sector will help you overcome this hurdle. You will have to find a bank where they let you open an account on the basis of a Know Your Customer (KYC) Form. A KYC is a basically a form that they fill out after asking you some questions about how you earn your money. No additional proof of income is needed.
Most banks require a minimum deposit of at least $500. Some smaller banks make do with $100.
Advantages of foreign currency accounts
Once you’ve opened your account you can enjoy some advantages:
- Foreign currency checks clear in USD: Checks from adsense and the like can be deposited in your FC account and the amount will be credited in USD. The advantage is that you can also withdraw in US dollars and exchange at the prevailing open market rates. You don’t have to worry about rupee depreciation. This is a major advantage because the rupee depreciated by 22% against the US dollar in 2008 and around 5% so far in 2009. By keeping your money in a FC account you are protected from rupee depreciation.
- No income tax: Deposits in FC accounts are not subject to income tax! So you can receive adsense cheques and deposit them into your FC account and not pay any taxes!
- No WHT on withdrawals: There is no With Holding Tax (WHT) on withdrawals from FC accounts. Withdrawals of Rs. 25,000 or more from Pakistan Rupee (PKR) accounts are subject to WHT but no withdrawals from FC accounts are liable to WHT! So you can withdraw even thousands of US dollars and not pay a cent!
- Outgoing international wire transfer: An FC account is allowed to transfer money via outgoing SWIFT wire transfer to a foreign country. You can pay hosting fees and other expenses using this method.
Disadvantages of foreign currency accounts
However everything has a price in this world so there are some disadvantages associated with FC accounts.
- Minimum balance: An FC account has a minimum balance requirement that ranges from $100-$500. This is a significant amount of money to have blocked in an FC account.
- Low interest: Most Pakistanis don’t like to receive interest on deposits as it is prohibited in Islam. Nevertheless the fact remains that FC accounts deliver lower returns than PKR accounts even in Islamic banks.
- Check clearance fees: Banks charge fees when you deposit checks from foreign companies. The reason is that they have to send the cheques to new york for clearance and the associated courier and labour costs have to paid for by you. The amount is usually in the range of $9-15 per check.
- Large withdrawals require notice: Banks usually don’t keep a lot of foreign currency with them. So if you want to make a large withdrawal you have to go to their head office or call up your branch and give them a few days notice for them to arrange the cash. This is inconvenient and a security hazard in a crime ridden country like Pakistan.
- Check clearance delays: Checks can take up to a month to clear. They are sent to New York for clearance but the amount is not credited until two weeks later. This is due to another State Bank of Pakistan rule.
Overcoming the disadvantages
A lot of the disadvantages of FC accounts can be overcome with some pre planning:
- You can hold payments at your ad network to receive multiple months payments in one check and save on check clearance fees.
- Some banks allow free check clearance if you maintain a large balance. This means that you receive every cent you earn! Make sure you ask your bank if they provide this service before you open an account.
- Choose cheque as a payment method when the amount is large and you can justify the clearance fees. Use western union or wire transfer if that is not the case.
Conclusion
I personally feel that opening an FC account was one of best business decisions I made. Its saved my earnings from rupee depreciation and I enjoy free check clearance so I receive every cent of my earnings. I strongly recommend website developers and freelancers who are thinking long term to open an FC account.
Which bank are you using?
Thanks You Very Much! for too much useful details. i am also involve in freelancing and web hosting features and i am unable to open a FC account with these features you mentioned. Please tell which bank service you are using if you could favor me.
Thanks in Advance,
Khurram Aziz
hello khurrambhai plz sir mujha be freelance par kam karna sikha dain plz,may bht pareshan hun
Yup same question, name of the bank which offers you all those services that you have mentioned in your post.
Thanks
IK
You can open a foreign currency account at any bank in Pakistan. I bank with Faysal bank and they give me free cheque clearance. But according to their latest schedule of charges (available on their website) they are no longer giving this free service to new customers. So you will have to negotiate with them if you want fees waived.
Hi, brother you relly posted a very useful comment but i have some questions about an FC account,recently i have opened a joint account with my father in USD i have $2000 in it and now i want to add more $80000 to my account what is the state bank policy about FC account if i add more $80000 to my account will the governement freez my account? i am not a web developer i’m the BCS student and my father is a doctor we have sold our property which is in tribal area which have no offical docments,that’s the big reason that i can’t provide property sell certificate to the bank/ governement too,i have account with Standerd Chartered and want to maintain and strighten it because i want to apply for the visit visa of UK plez advice me and inform me about the state bank/government policy about tis regard.
thanks a lot for your post.
Talk to a lawyer or a chartered accountant.
I wonder how did you manage to get a Foreign Currency account at faysal bank without showing any proof of income. I have went from bank to bank without any success (UBL, MCB, Standard Chartered etc.) as they all ask for proof of income.
P.S. I agree with the plus points of having an FCY account but not all banks have a “no WHT” policy. I think Faysal bank is probably unique in that area. Most of the banks have a 3% tax on FCY accounts as per state bank rules. As far as I remember, it’s higher than the normal one.
As pointed out in the post some banks will open an account based on a KYC form. You will have to speak to a suitably senior employee like a branch manager. Usually personnel in newly opened branches are likely to be more accommodating as they are especially eager for deposits 😉 .
There is no 3% tax on FC accounts that I know off. Could you provide a link to an online source so that I can verify your claim? If there was a tax it would apply to all banks as taxes are collected for the government not for any bank. I have made many withdrawals and never had to pay a cent.
Ohh the disadvantages are more then the advantages.
hi. i have a question for you kindly reply. i am a fcy account holder. i withdraw 500 dollars after being converted into pak rupee. after conversion the amount exceeds 25000 rupees. whether i will have to pay witholding tax or not?
Withdrawals from FC account are in foreign currency not rupees. So no WHT AFAIK.
Thankyou for the useful information.
Which banks in Pakistan providing support for online e-commerce websites eg. merchant account to recieve payment through credit-cards from outside Pakistan?
If still not, what are the alternates to recieve such payments?
Thank you for the info,I am facing a lot of trouble in providing payment prof with my pkr account these days.Last year when I tried to open my account,banks(MCB,Silk,HBL) were not a little bit cooperative when I discussed the online work and payment thing.I hope I’ll be able to open fc account now.
Yes Ayesha you are right ,
Dont bother with them telling them that you do this and that just tell them you are website developer doing individual business , they will require a stamp and a pad ,and it shall cost no more than 100 rupees.
so give them what want(these two things) and they shall be more than happy to server you like a valued customer.
No more proof of income is required. 🙂
Aoa. Could you please provide specs of “pad”; should I print it with my personal name or have to adapt some company name?
Thanks for your help!
Dear Mr. Abdussamad Abdurrazzaq
Thanks for these informative and useful posts.
I have to send Money in US$ to a Company in USA.
Just for getting information, i visited some banks,they all said that you can’t transfer the funds from your FC account to any Company’s account, you can only transfer it to Individual account.
Can we have such restrictions?
Please help.
Kind Regards
This question has already been answered here (wait for the page to load to completion). Answered with a quote from the State Bank of Pakistan website no less. As you can see you are allowed to send money to almost any company or individual on the planet using your FC account. No restrictions from the Pakistani central bank which is the regulator of commercial banks in Pakistan. So please point this out to the bankers you talk to and let us know their response.
Is there any bank in Pakistan that offers CAD (Canadian Dollar) ?
i am a doctor and working in Saudi Arabia and want to keep my account in Riyal through one bank so i be able to use it either in Saudi Arab or Pakistan, which bank provide such facility?
Thanks.
I’m having a job in SA and wish to maintain my account in the same Saudi Riyal currency in Pakistan. Is it possible?
Yeah it’s possible if you can find a bank that supports accounts in Saudi Riyal. Most don’t. Yen, USD, and EUR accounts are more common.
I’ve tried many Pak banks like HBL but they say they don’t have provision for Saudi Riyal account.
Plz specify a Pak bank for saudi riyal account.
Well, wire transfers aren’t in Saudi Riyals so it makes no sense to open an account in Riyals. Your Riyals will be converted to USD before the wire is sent so open an account in USD.
Try UBL
Hey, I frequently visit USA and having salary around 50,000PKR from my employer. Can I open a USD account? Also if I want to pay money to some company or person in USA, does this account offer debit card facility for that purpose and will that be charge free to make international transactions?
AFAIK no bank in Pakistan offers debit card for foreign currency account. You can get a VISA Debit card with a PKR account though.
i want to know if i open foreign currency account in Pakistan than in which currency to deposit amount in my FC ACCOUNT i earn in pk rupees please explain
Depends on the currency of your FC account. If its a USD account you buy dollars from foreign exchange companies and deposit them in your account.
damn man u mean banks in Pakistan don’t have ability to convert PKR to dollar euros and GBP for depositing in FC account. exchange companies rates for exchanging money is too high against pk RUPEES i don’t c any benefit
LOL the interbank rate is lower but it’s only for large transactions between banks. The open market rate that exchange companies offer is the best you and I are going to get.
Hi AbdusSamad,
First of all, very helpful write-up, thanks. Second, in a comment on this post (//abdussamad.com/archives/333-International-Payment-methods-for-Pakistan:-SWIFT-Wire-transfer.html#comment-59689) you say that its not possible to receive payments from a foreign company in a foreign currency account but I don’t understand then how are you receiving payments from Adsense (i.e., Google) in your FC account, can you please explain?
Thanks
Google used to pay me via cheque. USD cheque drawn on their US citibank branch. That is what I deposited in my USD account.
I see. Thanks for replying.
I am an overseas pakistani working in UAE. I would like to open a foreign currency account in GBP and USD.I will remit the amount from UAE to Pakistan.
Question: I would like to know if it is possible to send this amount out of pakistan, say for education of children. (My son is expected to go to USA for study next year and I would be needing FCC to pay for his fees and living cost)
Yes
What is the difference between FC resident account and FC non-resident account. I am a Pakistani living in UAE, will this be treated as non-resident FC account?
Can I give me address aboard in the account opening form?
There are two address in most bank forms. the present address and permanent address, is it acceptable to give both addresses of ouside pakistan. ( I do not have my own address in pakistan?)
hi there I am performing my job in an American company over Oman my average salary is 3000 USD let me guide which bank is suitable where directly my salary could be posted If I have proven my employment.
Why are you broadcasting information about your monthly salary to perfect strangers on the Internet?
I was told by a pakistani bank that remittance aboard from your Foreign currency account has many conditions to be fullfilled including the reason of sending the money?
Is this correct, if I have sent money from aboard to Pakistan in FCC account, then why do they put all this conditions
I am not sure I understand your question. Are the conditions on outward remittances from Pakistan or inward remittances to Pakistan?
It is on outward remittances from Pakistan..
I am an overseas Pakistani, I was told that if I send my money to Pakistan (FCY account in USD)i.e. inward remittances to Pakistan is not an issue.
If I want to send out the money – outward remittances from Pakistan when I need it overseas, it is not easy and there are many conditions which needs to be fullfilled including forms, reason, etc.
Not sure if this is correct, then I have an issue as I intend to send it out for my sons education expenses to USA later on..
There are no restrictions on outward wire transfers from FCY accounts. See my comment on another post:
//abdussamad.com/archives/142-Receiving-money-via-SWIFT-wire-transfer-or-TT-in-Pakistan.html#comment-694
AoA. Dear Abdul Razzak.
Can u guide me that, which Bank is more reliable for FC account which required minimum deposi (100$-500$) and offer ATM card (which i pay online access fees to the particular US company for ad sense work by atm, where ATM 4 digit are required).
I visited many Banks in but they didn’t guide me proper.
I can’t recommend a bank. That is your choice. But I can tell you that I know of no bank in Pakistan that gives you an ATM card on an FC account.
Thanks For Reply Back!
Okey! any other alternate by which i pay my access fees by digits process like atm, i used Payza money processor and u know it offers atm card in any country, can i use payza card for tht purpose?!
I don’t know what fees you are talking about but if you want a VISA debit card that works on the Internet you need a rupee account at a bank that provides such a card. I have heard that standard chartered does that but I am sure there are other banks that do it to.
Whichever bank you go with make sure that the card they provide works online before you open an account with them. In Pakistan just because a card carries a VISA/Mastercard logo does not necessarily mean that it will work on the net.
i confirm that the visa logo holder and if u have online banking , you can use the card for online payment.s i have used the standard charted one for paying domains successfully
As I said above standard chartered debit cards are known to work online. But most other bank’s visa debit cards don’t work online. So the presence of a visa logo is no guarantee that it will work online.
Thanks for reply back Dear…..
I meant, the particular site required access fees to work on it, and from here (Pakistan) i have to pay that access fees only by card (online) because thr is option on that site in registration application that for payment of access fees we just enter last 4 digits (which are visible back side of atm card), so thats why i need atm card which access able globally.
Can we deposit Adsense check in Pakistani Currency Account?
Yes. But it is better to open a USD account. If you deposit in a PKR account you will get slightly less than interbank exchange rate. If you deposit in USD account you can withdraw dollars and sell in the open market. Currently the difference between interbank and open market rate is more than 3%.
Bro i opened USD currency account from 500 USD dollar now i want to deposit almost 5000 USD in my account where i can get good rate to convert PKR to USD i live in islamabad
LOL there is no good rate available to the general public! Just buy from an exchange company. Haggle with them before you buy, though.
dear sir, i’m doing forex here in pakistan i receiving and withdrawing money through webmoney. now i want to open a foreign currency account with ubl bank. to receive the money from forex broker which in satuated in foreign country. i want to deposit and withdraw money through wire transfer with them. is it possible to send and receive money through wire transfer from ubl. and another question is, you have told to someone in the above comment that you have also need a rupee account with your fc account.
Ask your bank for help. I would avoid UBL though. Their customer service is horrible.
hello
i am currently working in USA, now i am planning to move to pakistan, i have bank accounts over here in USA, i would like to open FC account in pakistan, where i can keep transfering USD on regular basis, i have pkr account in js bank, which bank do you recommend and why? Also, which is the most convinient and cheapest way to transfer USD to pakistan ?
Thank you
a) Don’t move to Pakistan. You have to be soft in the head to leave the US for Pakistan.
b) I don’t recommend a bank. It’s not like I have experience with all the banks in Pakistan so how can I make a recommendation?
c) Cheapest depends on the amount. Convenient? How would I know what is convenient for an American? I’ve never been there and have no idea what your lifestyle is like in that country.
Sir i have question.i have online quran business all over the world and my customers sending me money from all over the world can u just explian me how FC account help me…which advantages i can get if i will FC bank account
thanx
What do you think is written in the article above but the advantages and disadvantages of FC accounts?
What’s the rough interest rate on a foreign currency account if you deposit £50000
According to this article “Minimum balance: An FC account has a minimum balance requirement that ranges from $100-$500. This is a significant amount of money to have blocked in an FC account. ”
You mean we can not use or send this money to anyone? it will just remain in account ?
You can use it but if your average monthly balance is less than that they will charge you a minimum balance fee. Ask your bank for more info.
Asalam Allikum
Brother can you let me know if there any policy by banks that if if get payments in usd so it will convert in pak rupees and a individual is not eligible to get money in foreign currency account. i also read this from state bank website “Payments in foreign exchange received by an Authorised Dealer on behalf of a resident in Pakistan must not be retained in foreign exchange but must be converted into Rupees unless the State Bank has given general or special permission to the beneficiary to retain the foreign exchange received by him.” let me know if you can provide me some supporting documents so that i can fight with my bank to keep my usd earings of affiliate marketing in my usd account.