Finally, payment regulation in Turkey has been amended. As of December 1th, sub-regulations expected for 2 years entered into force. We have reviewed this amendment that was adopted substantially from the European Union legislation and summarized them for you:
https://www.resmigazete.gov.tr/eskiler/2021/12/20211201-1.htm
OPERATIONAL PERMIT APPLICATION PROCESS HAS BEEN INCREASED FROM ONE TO THREE STAGES
The first comprehensive change is certainly related to the establishment of companies and the permit to be obtained. The establishment will be processed in stages from now on. As you know, when establishing a bank, there was a two-tier procedure as (i) establishment license and (ii) operating license. On the other hand, a three-tier application process has been provided for payment and electronic money institutions. In summary, first go to the Central Bank of the Republic of Turkey (“CBRT”) and obtain your license, then register your articles of association. Afterwards, apply to the CBRT in 2 stages, complete your informative review and start operating when you receive the final approval.
Here, the remarkable amendment is that an application fee in the amount of 500.000,00 TL is required.
ESTABLISHING PAYMENT OR ELECTRONIC MONEY INSTITUTION IS NOW MORE EXPENSIVE
Cost of operating payment service and electronic money institution will also increase significantly.
First of all, although the minimum paid-in capital amount has not been amended (this amount is 2 million TL for payment institutions and 5 million TL for electronic money institutions, which can only be amended by law), a triple structure is provided with a change in the calculation of the minimum equity capital. 3 million TL for payment institutions providing intermediary services for bill payments, 5 million TL for other payment institutions and 13 million TL for electronic money institutions. Many parameters such as previous years’ profit will also be taken into account in the minimum equity capital calculation.
The CBRT requires the companies to hold a certain amount of collateral at the CBRT. Even the banks hold the required reserve in proportion to their deposits and other liabilities. This is expected that payment institutions will be subject to this obligation ranging from a minimum amount of 3 million TL. The regulation, in which whether the interest will be charged or not is not provided, attracts the attention as a serious cost.
Even though the related regulation has been tailored as being flexible in terms of professional liability insurance for open banking institutions that provide account information service, this provision means a significant cost for them as well.
FRAUD ACTIVITIES WILL BE PREVENTED IN COORDINATION WITH INTERBANK CARD CENTER (Bankalararası Kart Merkezi A.Ş.) (“BKM”)
New registration structure for member workplaces through a central system is now possible. In this respect, a member workplace having propensity for fraud will be detected sooner and will be excluded from the system easily.
IT IS MORE DIFFICULT FOR MINORS TO BE CUSTOMERS
It has been provided that persons under the age of 18 (minors) will not be able to use prepaid cards without the consent of their parents. Therefore, certain companies may experience a serious business model problem. Establishing the system for obtaining the explicit consent of the parents and familiarizing people with this model would create an unusual outcome for Turkey.
CLOSED-CIRCUIT SYSTEMS CAN ALSO BE SUBJECT TO LICENSE
Payment methods used as closed circuit in some supermarket-airline networks etc. can also be subject to regulation by the CBRT by taking the facts into account such as size etc.
THOSE WHO ISSUE CRYPTOCURRENCIES CONSISTENTLY ARE ALSO SUBJECT TO LEGISLATION
These institutions are now accepted as being the entities that issue electronic money. However, a sub-legislation tailored for such institutions is on the table.
USING ANONYMOUS PAYMENT CARDS ONLINE WILL NOT BE POSSIBLE
It has been regulated that the anonymous payment cards, which have become widespread today in retail stores and which can be used especially on game platforms after their purchase, can now only be used in physical workplaces.
Exceptionally, their usage will be possible for payment transactions regarding purchases of goods or services through service providers and intermediary service providers with a trust stamp, as well as for bill payment transactions.
BKM AND OPEN BANKING
Within the scope of open banking, privilege which avoids the access to the APIs of banks without an objective reason has been abolished. Thus, all licensed open banking institutions (payment initiation service and account service) will have full access to banks not only through the web service but also through the API.
On the other hand, companies that provide account information services will be able to provide information services relating to administrative and operational processes, as an exception to the rule that payment service companies cannot operate in different field of activities.
Finally, these institutions should comply with BKM’s technical and operational obligations. In this respect, they should meet BKM’s controls and evaluations. Provision of this regulation is very interesting since BKM is a subsidiary of banks.
IT WILL NOT BE POSSIBLE FOR EVERYONE TO ACT AS REPRESENTATIVE
Persons and institutions, which will act as representatives will have to be registered to the Association. In addition, these people will be required to meet certain conditions and payment institutions will need to protect their financial and social reputation.
EXPLICIT CONSENT AND SECURE PAYMENT ARE ESSENTIAL
We will prepare a detailed article for those who are wondering how Explicit Consent and Secure Payment will work in this system. Stay tuned!
RISK ASSESSMENT FOR REMOTE ACCESS TRANSACTIONS
Payment institutions should have a risk assessment structure for such transactions. In addition, they must accept someone as customer about whom they believe that constitutes a risk, only after face-to-face communication.
Also, you can check our latest article about digital wallet regulation in Turkey.