The Path to Acquiring a Payment and Electronic Money License in Türkiye: A Comprehensive Guide

In an era where digital payments are surging, Türkiye positions itself as a pivotal player in the fintech sector. The regulatory framework set by the Central Bank of the Republic of Türkiye (“CBRT”) outlines a meticulous process for companies aspiring to enter the payment services (including open banking) and electronic money issuance market.

This article provides a comprehensive overview of the essential steps, requirements, and insights into obtaining a payment and electronic money license in Türkiye, based on both the relevant legislation and our practical experiences.

Understanding the Regulatory Landscape

Initial Application Requirements

The journey toward obtaining a license begins with a fundamental prerequisite: the trade name of the prospective company must unambiguously signify its role as either a payment institution and/or an electronic money institution.

To obtain the license, the applying company must be a joint-stock company incorporated in Türkiye, as mandated by the legislation. Before registering such a trade name in the commercial registry, an applicant must submit a notification letter to the CBRT, accompanied by detailed forms providing information about the shareholders and individuals falling under the category of “qualified shareholders.”

This initial submission must include a draft of the company’s articles of association, proof of payment of the application fee, which is set at TRY 500,000 (approximately USD 16,250 as of February 2024), and evidence of compliance with relevant legal obligations.

!! It should be noted that The CBRT investigation extends to the disclosure of the company’s shareholder structure down to the level of real individuals. Once the shareholder structure is established, documentation pertaining solely to qualified shareholders — those holding 10% or more of the shares or possessing preferential rights — within the shareholder chain is submitted to the CBRT. Throughout the process of identifying the shareholders of the License applicant company, documentation related to these shareholders may vary if they include funds, banks, or sui generis entities, whether domestic or foreign.

Therefore, conducting a thorough examination of the shareholders prior to this stage enables the early identification of any potential surprises or issues that may arise during the process.

Financial Thresholds

Financial stability is paramount, underscored by minimum paid-up capital and equity amount requirements tailored to the nature of services provided.

These requirements are outlined as follows in terms of minimum paid-up capital and equity amounts (as of February 2024):

• For companies exclusively offering bill payment services, the minimum paid-up capital is set at TRY 1,000,000 (approximately 32,000 USD), with a minimum equity amount of TRY 7,000,000 (approximately 227,009 USD).
• For companies offering other payment services, which include payment facilitation, money remittance, acquiring of payment transactions, and fund transfers, the minimum paid-up capital required is TRY 2,000,000 (approximately 64,000 USD), with a minimum equity of TRY 15,000,000 (approximately 488,000 USD).
• Entities engaged in issuing electronic money must have a minimum paid-up capital of TRY 5,000,000 (approximately 163,000 USD), along with a minimum equity of TRY 41,000,000 (approximately 1,334,000 USD).

It’s worth noting that companies exclusively providing account information services (i.e. not offering payment initiation services), commonly referred to as open banking services, are exempt from any minimum paid-up capital requirements.

The Two-Step Approval Process

The application undergoes a two-phase scrutiny: an initial investigative review followed by a final approval stage, necessitating a hands-on delivery of documents to the CBRT’s headquarters.

Although the duration of the below process may range from at least 1 to 2 years, it is essential to adhere to the specified timelines diligently.

Investigative Review Phase

This phase demands a comprehensive dossier, including board resolutions for application, detailed business plans, financial statements audited or approved by accredited professionals, declarations from significant shareholders and controlling parties, and an array of additional documents elucidating the company’s operational, financial, and compliance frameworks.

Final Approval Phase

Upon navigating the investigative review successfully, applicants are ushered into the final approval stage, requiring further detailed submissions as well as license fee which is set at TRY 1,000,000 (approximately USD 32,500 as of February 2024). These encompass assessments of the company’s operational readiness, internal control mechanisms, compliance with CBRT’s regulations, and evidence of financial integrity and technical competency to deliver the proposed services.

Conclusion

Navigating the regulatory pathways to secure a payment and electronic money license in Türkiye demands meticulous planning, adherence to financial prerequisites, and comprehensive documentation. This framework not only ensures the integrity and stability of Türkiye’s financial system but also paves the way for innovative payment solutions. As the digital economy expands, obtaining this license is a strategic step for companies aiming to be at the forefront of Türkiye’s fintech revolution.