New Regulation on Payment Services and E-Money Issuance and Payment Service Providers
Following the latest developments in the Fintech sector, new Regulation on Payment Services and Electronic Money Issuance and Payment Service Providers (“Regulation”) was published in the Official Gazette on 1 December 2021 by annulling the Regulation on Payment Services and Electronic Money Issuance, Payment Institutions and Electronic Money Institutions dated 7 June 2014.
The Regulation provides significant amendments on principles of the issuance of electronic money, the operating permits of payment and electronic money institutions (“Institution/s”), the measures to be taken in various fields by Institutions, and the providing services together with the foreign legal entities.
Significant Amendments Introduced by the Regulation
-Permit procedure amended and applications to the Central Bank for operating in the field of payment services or to issue electronic money in Turkey foreseen as two steps: intelligence examination stage and final approval stage.
-The company applying for the operating permit is foreseen to pay the application fee of 500.000 TL to initiate the operating permit application process.
-After the documents required for the intelligence examination stage are submitted to the Central Bank, these documents and the information and documents provided by the Central Bank are evaluated and approved by the Central Bank for the intelligence examination stage if deemed appropriate.
-Unless the application is made for the final approval stage within the specified period, the applicant company loses all its rights within the scope of the intelligence examination stage. In this case, the company requesting to obtain an operating permit shall perform the necessary procedures for the re-intelligence examination stage.
-With the final approval, the operating permit is granted. The company that has been granted an operating permit shall notify the Central Bank that it has started operating within 10 days from the date of commencement of its activities. The operator company is required to pay the license fee of 1.000.000 TL by the notification.
Cooperation with Foreign Legal Entities
-New Regulation provides that the domestic Institutions may cooperate with legal entities residing abroad, which have obtained permission from the Central Bank, to perform its purpose or activities.
-For such cooperation, the foreign legal entity to cooperate shall be authorized to provide payment services or issue electronic money by the relevant authorities of the country where its head office is located.
-It is obligatory that the documents and records regarding the payment transactions to be realized as a result of the cooperation are kept domestically by the Institution.
Electronic Money (“E-money”)
-It is provided that intangible assets that are only issued in exchange for a one-to-one fiat currency created virtually and distributed over digital networks are accepted as electronic money.
-The customer may request a partial or full repayment of the electronic money.
-According to the customer’s preference, repayment is made by converting the electronic money into banknotes, coins, deposit money, or electronic money issued by another Institution.
-In cases where the electronic money fund is paid by credit card, the electronic money shall be repaid only to the same credit card account.
Anonymous Prepaid Tools
One of the new concepts provided by the Regulation is anonymous prepaid tools. An anonymous prepaid tool means a prepaid tool that is not connected to any payment account in any way and has not been identified or verified. It can be used by making a prepayment.
-Anonymous prepaid tools can only be used i) in the payment transactions where anonymous prepaid tool holder is physically present and the payment is conducted physically, and, ii) in payment transactions and bill payment transactions conducted through a service provider ensuring a Trust Stamp.
Workplace Registration System
-It is foreseen that workplace code will be given to the workplaces providing goods and services via a payment method within the scope of payment services to prevent fraud and malicious use in the field of payments.
Overnight Interest of Payment Funds
-It is clearly foreseen that investing the payment funds in the protection account to overnight interest does not constitute a violation. Thus, it is possible to deposit the payment funds and yield overnight interest in the same bank is possible.
-However, such a facility has not been introduced for electronic money protection accounts.
-Institutions have to provide assurance before the CentralBank.
i. The minimum amount of assurance required to be kept by the payment institutions providing services for exclusively mediating bill payments is 2.000.000 TL,
ii. The minimum amount of assurance that other payment institutions must keep before the Central Bank is 3.000.000 TL,
iii. The minimum amount of assurance that electronic money institutions must keep before the Central Bank is 5.000.000 TL.
Framework Agreements to be executed via Remote Communication Tools
-It is foreseen that the payment service provider is obliged to take the necessary technological and operational measures to ensure that the framework agreement executed through a remote communication tool is as secure and reliable as the framework agreement executed with the physical presence of the parties.
-The payment service provider shall provide the information and documents required to be obtained from the customer regarding the framework agreement to be executed by means of remote communication using the methods such as mail, fax, e-mail, and online video calls, a central structure approved by the Central Bank, or other innovative methods appropriate to the technology of the day.
-In case the payment service provider performs a payment transaction by a framework agreement to be established via a remote communication tool, the terms of the agreement shall be published on its website.
Notifying Consumer Rights
-The payment service provider is obliged to prepare an easily readable electronic or physical information form, written in a clear and easily understandable language, containing the rights of consumers regarding payment transactions.
-This information form, besides the rights of consumers regarding payment transactions, includes information on alternative access channels and innovative payment methods that they can use to make these transactions, security and protection measures related to these transactions, the necessity of making remuneration in a fair and transparent manner, and alternative methods regarding the rights to complain and apply.
The Regulation became effective as of December 1, 2021, and a 1-year compliance period is foreseen for the stakeholders operating in the Fintech sector to comply with the recent obligations.
You may access the Regulation by this link; The Regulation on Payment Services and Electronic Money Issuance and Payment Service Providers