The Regulation of E-Money Services in Turkiye (Updated as of December 2023)
Updated as of December 2023.
In recent years, E-Money has been gaining traction as a viable alternative payment method to conventional cash both in Turkey and abroad.
At first, each company started online payment methods by integrating its software within their own websites. However, they required separate semi-agreements with each bank. They also charged monthly membership fees, POS machine maintenance fees, and took a commission from each bank. If the customer’s bank did not have an agreement with a credit card, the customer could receive payment from that website.
Entrepreneurs saw this problem as an opportunity, and their solution was led to the birth of the E-Money payment system.
Paypal, now a household name, is just one of the many examples of E-money payment systems in use today. All you need to do is sign up and link your bank to use their platform.
Then came the next generation payment system:
VENMO: without the need for IBAN and other bank information, people could send and receive money with nothing more than a username. If users did not receive their money within three days, VENMO dropped their commission fees.
Welcome to the E-payment system revolution!
Other big companies soon jumped on the bandwagon. In addition to Paypal, we now have ApplePay, Facebook Messenger, and GooglePay.
One should also mention that the E-Money payment system SQUARE, owned by the founder of Twitter, is incredibly popular with vendors and online retailers throughout the United States. The main difference being that Square implements its own special cash register machine, which enabled them to tap into the lucrative sales sector.
E-MONEY IN TURKEY:
Turkey is home to one of the world’s highest users of the Internet and social media. Unsurprisingly, credit card usage rates in Turkey are some of the highest in the World.
Turkey is Europe’s Largest Card Payment Country.
As a result, online payment methods have the potential for spectacular growth.
Turkey’s e-money sector is growing day by day. The most important reason for using online banking is highly Turkiye, and the young population is more also a significant factor.
Iyzco Company was sold to PayU Company for 165 Million Dollars.
Several companies set up shop in Turkiye before the government introduced e-money legislation. Once regulations were ratified and enforced, some companies were able to obtain licenses, whereas others were forced to leave the market.
Now that the regulators have started issuing licenses to operators and service providers, the industry is expected to grow exponentially over the next few years.
E-MONEY LAW IN TURKEY
In Turkey, principles and procedures regarding payment institutions and electronic money institutions are regulated under Law №6493 and the Regulation on Payment Services and Electronic Money Issuance and Payment Institutions introduced by the Banking Regulation and Supervision Agency (BRSA).
2013 : Law No 6493 on Payment and Security Settlement Systems, Payment Services and Electronic Money (“Payment Services Law”)
The regulation is the secondary legislation of Law №6493 on payment services and e-money institutions which came into force in June 2013. Law №6493 was drafted based on the European Electronic Money Directive.
2014 : The Regulation on Payment Services and Electronic Money Issuance and Payment (“Payment Services Regulation”)
June 27, 2014, 29043 — Bylaw
June 27, 2014, 29043 — Communique
The Communiqué on the Management and Supervision of Information Systems of Payment Institutions and Electronic Money Institutions, which entered into force after being published in the Official Gazette
By new law (November 2019)
Some of the BRSA’s powers are transferred to the Central Bank.
The law envisaging the transfer of certain powers of the Banking Regulation and Supervision Agency (BRSA) to the Central Bank was published in the Official Gazette.
For this purpose, in the law published in the current issue of the Official Gazette, “In the third paragraph of the 101th article of the Banking Law №5411, it has been changed as” by the financing companies “by the” financing companies, payment institutions and electronic money institutions “
Turkiye Association of Payment and Electronic Money Institutions is established.
Payment institutions and electronic money institutions, payment and Turkiye Union of Electronic Money Institutions, received permission to operate from the date they were made compulsory to apply to become a member within a month.
Europe’s new Payment Services Directive II (“PSD2”)
An electronic money institution intending to issue electronic money under the scope of this Law can operate provided that it is granted permission by the Board.
BOARD : Banking Regulation and Supervision Board ( BRSA ) Turkish: BDDK
Business Models Under Law №6493
- Electronic Money
- Prepaid Cards
- Prepaid Accounts
- Virtual Pos Services
- Virtual Marketplace Model
- Sub-Merchant Model
- Money Transfer Services
- Bill Payment Services
Electronic Money: It is defined as the monetary value that is accepted by the real and legal persons other than the electronic money issuing institution and used to perform the payment transactions defined in this Law.
Electronic Money Establishment: A legal person or entity authorized to issue electronic money under the Law.
Other Relevant Laws And Regulations:
- Financial Crimes Investigation Board
- Laundering Crimes
- The Terror Financing Crime
- Law on Protection of Personal Data
- Other laws and sub-regulations
E-MONEY LAW IN TURKİYE (Updated as of December 2023)
In Turkey, the framework governing payment institutions and electronic money institutions continues to evolve, driven by both domestic policy objectives and alignment with international standards. The primary legislation in this area is Law №6493, complemented by various regulations and communiqués issued by regulatory authorities.
Recent Developments
- Europe’s PSD2 Influence While not a member of the European Union, Turkiye has shown interest in aligning with EU standards, including the Payment Services Directive II (PSD2). This directive focuses on enhancing consumer protection, fostering innovation, and improving the security of payment services.
- Business Models Under Law №6493 The law covers a range of services, including electronic money, prepaid cards, virtual POS services, and money transfer services. These models have seen increased adoption, especially in the context of Turkey’s growing digital economy.
- Electronic Money and Cryptocurrency As of the end of 2023, Turkish law does not recognize cryptocurrencies as a legal form of electronic money. Consequently, they fall outside the regulatory perimeter of Law №6493. However, given the dynamic nature of this field, regulatory attitudes towards cryptocurrencies could evolve.
Licensed Companies The number of licensed e-money institutions in Turkey has been growing, reflecting the sector’s expansion. The BRSA maintains oversight of these entities, ensuring compliance with legal and regulatory standards.
Cryptocurrency & E-money Situation:
Cryptocurrency Laws not recognized under Turkish law. That is why Cryptocurrency does not fall within the scope of Law no — 6439 on Payment Securities Settlement Systems, Payment Services, and Electronic Money Institutions. There is currently no legislation that is specifically designed to refer to Cryptocurrency, and therefore it is not entirely accurate to declare this type of business activity.
LICENSED COMPANIES IN TURKIYE:
There are 17 active e-money institutions listed by the Turkish Banking Regulation and Supervision Agency (“BRSA”) in Turkey.
You can follow the current list from this link.
Updated Eligibility Criteria:
- Corporate Structure: The institution must be established as a Joint-Stock Company (JSC) in Türkiye, maintaining a formal and robust corporate governance structure.
- Shareholder Qualifications: Significant shareholders (owning ten percent or more of the capital) must meet the qualifications outlined in Banking Law Nr.5411, including a background in banking or finance, and a proven track record of financial stability and integrity.
- Capital Requirements: The minimum capital requirement may be subject to adjustments based on current economic conditions. The latest figure should be confirmed from the most recent CBRT guidelines.
- Operational Competence: Institutions must demonstrate the capability to manage e-money services effectively, including having adequate management, personnel, and the necessary technical infrastructure. Emphasis is placed on handling customer complaints and objections, reflecting a focus on consumer protection.
- Security and Continuity Measures: Robust security measures and plans for operational continuity are essential, especially considering increased cybersecurity threats and the growing reliance on digital financial services.
- Transparency and Supervision: A clear and transparent organizational structure is crucial for effective oversight by the CBRT. This includes a straightforward ownership and management structure.
Recent Regulatory Focuses:
- Enhanced AML/CFT Compliance: Adherence to anti-money laundering (AML) and countering the financing of terrorism (CFT) regulations has been tightened, with more stringent checks and reporting obligations.
- Digital Security Standards: Compliance with international standards like PCI-DSS is now more rigorously enforced to safeguard digital transactions and customer data.
- Alignment with European Regulations: Türkiye continues to align some of its financial regulations with European standards, fostering a more integrated and secure digital payments environment.
Steps for Establishing an E-Money Company:
The steps for establishing an e-money company in Türkiye remain largely the same, with a greater emphasis on documentation, compliance, and adherence to enhanced regulatory requirements during the application process with the CBRT.
Market and Investment Considerations:
- Growing Digital Payments Sector: The digital payments sector in Türkiye is showing significant growth, offering substantial opportunities for new entrants.
- Customer Trust and Credibility: Obtaining a license from the CBRT is crucial for establishing customer trust in a highly competitive digital financial market.
- Legal and Expert Consultation: Consulting with legal and financial experts remains essential due to the complex and dynamic nature of financial regulations.
It is evident that companies with e-money licenses will have control over the future payment system.
Moreover, obtaining a license not only enhances credibility in the eyes of customers, but also unlocks new growth opportunities. The current high usage of online credit cards in Turkiye indicates a substantial and untapped potential for e-payment services in the coming years.
Considering these factors, you have a unique chance to enter this thriving market and position yourself for success. However, we highly recommend taking necessary precautions by collaborating with a reputable law firm and consulting competent experts before finalizing your decision. Their guidance and expertise will provide you with valuable insights and strategies to effectively navigate the Turkish market and maximize your investment potential.
Sima Baktas — Attorney at Law.
GLOBALB LAW FIRM
INTERNATIONAL LAW FIRM BASED IN ISTANBUL
00902122588121
www.globalblaw.com / globalb@globalblaw.com /sima@globalblaw.com
