Turkish Law Blog

A New Era in Payment Systems

Ceylan Necipoğlu Ceylan Necipoğlu/ University of Tartu
06 February, 2019

Following the increased use of alternative payment and monetary systems, The Law on Payment and Security Reconciliation Systems, Payment Services and Electronic Money Organisations numbered 6493 (the “Law”) has entered into force as of 27 June 2013, upon its publication in the Official Gazette numbered 28690.

The Regulation on Payment Services and Electronic Money Issuance and Payment Institutions (“Regulation”) and the Communiqué on the Management and Supervision of Information Systems of Payment Agencies and Electronic Money Institutions (“Communiqué”) (jointly referred to as secondary legislation), containing secondary provisions to the Law, have entered into force on 27.06.2014.

The Payment Service Directive 2007/64 / EC (“PSD”) adopted by the European Union (“EU”) on 13.11.2007 was taken into account in the preparation of the Law and its secondary regulation. However, as a result of the EU policy to review regulations and assess their ability to meet requirements every 5 years, on 25.11.2015 the Payment Service Directive 2 (PSD 2) numbered 2015/2366/EC entered into force, thereby repealing the PSD. With PSD2 it was aimed to (i) take additional measures to ensure transaction security and end-user protection; (ii) support innovation in the payment area; (iii) provide the standardization of the conditions for the use of new payment methods such as mobile payments and online payments and the authorization of the European Banking Authority (EBA) therefor; (iv) provide the standardization of transaction prices in the member states; and (v) regulate new payment systems to establish their legitimacy.

In Turkey however, the rationale of the Law was stated to be the probability of the selection of non-cash payment solutions, mirroring the development of technology and the need for a legal regulation in case of the preference of electronic money as a means of payment. The Banking Regulation and Supervision Agency (BRSA) is authorized to audit and standardize non-bank institutions that can offer payment service activities in order to ensure integrity of the legislation.

It is accepted that a new era in banking has started in the EU with PSD2. Under the PSD2, aiming at the development of alternative methods to traditional payment methods regulated by PSD, the payment company may initiate a payment order to a payment service provider at the request of the user of the payment service in relation to a payment account held at another payment service provider. In other words, the payment company will be able to access the account of the user online on the seller's website and pay directly to the seller. This way payments will be made easily and inexpensively without using a bank or debit card.

Additionally, the concept of account information service providers is regulated; hereby users of the payment service provider will be able to view and access the balance of one or more of their accounts on a single panel.

Payment transactions mediated by telecommunication operators are also regulated by PSD2 and the exemption granted to the sector is further regulated. All these developments provide a basis for developing and spreading a new cycle of API banking (application programming interface-open banking).

It is yet unclear if the Turkish Law, prepared in compliance with PSD will be aligned with PSD2. However, on June 7, 2018, The Regulation on the Amendment of the Regulation on Payment Services and Electronic Money, Payment Institutions and Electronic Money Institutions was announced on the BRSA website and entered into force as of October 12, 2018 upon its publication in the official Gazette.

As of October 12, the PTT is accepted as an electronic money issuer and payment service provider. The obligation of Banks and invoice issuing institutions to conclude contracts has been lifted.

While flexibility is being provided for the activities; it is foreseen that, in addition to the operation of foreign exchange transactions and payment systems these organizations can also provide complementary services to payment/electronic money issuance services which facilitate the activities of payment service providers such as card storage, processing of card data, fraud and fraud prevention, as well as education and consultancy services related to payment services. Cash amounts have been added to the obligation to transfer to the electronic protection account and the lease certificate has been included in the scope of the obligation to provide collateral. Contrary to common expectations, API banking has not been regulated in the Draft. There are currently some regulatory barriers in front of API banking.

While traditional payment services in the EU are gradually abandoned with PSD2 and a brand new cycle for banking begins, making similar changes will be one of the steps that could pave the way for API banking in Turkey.

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