Fintech Law

Cosar & Akkaya Law Firm has a well-known practice in the area of Payment Systems, Payment Services, and Electronic Money and is developing its practice in the wider area of Finance and Technology with a strong belief that İstanbul, Turkey will become a FinTech hub. We are working in the field since the introduction of Law on Payment and Security Settlement Systems, Payment Services and Electronic Money Institutions numbered 6493 which regulates the procedures and principles of payment and security settlement systems, payment services, payment institutions, and electronic money institutions.

We are currently advising a group of domestic and international clients who have already licensed in Turkey. Our work for the licensed Payment Services Providers and E-money Institutions has focused the compliance matters pursuant to Turkish FinTech laws and regulations.

Fintech brings together finance and technology to provide innovative, faster, and easier financial services. With the help of technology, FinTech makes financial services accessible to a wider group of people. We as COSAR AKKAYA LAW believe the future of the FinTech sector and for this reason, one of our founding mottos appears as ‘’law, less tradition’’.

Central Bank of Turkey is the authority regulating the Payment Services Provider and E-Money Institution in Turkey.

The main piece of legislation governing both payment services and e-money sectors in Turkey is “Law on Payments and Securities Settlement Systems, Payment Services and Electronic Money Institutions” (Law No.6493) which was enacted in 2013. The Law No 6493 and related secondary legislation are mainly based on the “Payment Services Directive” (2007/64/EC, 13.11.2007) (PSD1) and “E-Money Directive” (2009/110/EC, 09.02.2009), and “The Electronic Money Regulations 2011 No.99” of England until very recently. A new amendment for Law No 6493 was published in the Official Gazette on November 22th of 2019 and it has become effective by 1st January 2020. With the amendment, the previous regulator's (Banking Regulation and Supervision Agency - www.bddk.org.tr) regulation and supervision responsibilities in the payments services and e-money sectors were given to the Central Bank of Turkey ('CBT'- www.tcmb.org.tr). Therefore, the CBRT has become responsible for the regulation and supervision of the payment services/issuance of e-money as of January 1st, 2020. This recent amendment mainly aims to align with the 2015/2366/EC (PSD2). It must be noted that Turkish regulation in payment services and e-money fields seem largely compatible with the EU Directives and Regulations.

Obtaining Payment Services License and/or Electronic money license in Turkey

We assisted and continue to assist several domestic and international clients of payment institutions and electronic money institutions to obtain a license to operate in the field of payment services from Banking Regulation and Supervision Agency (previously) and currently Central Bank of Turkey.

We advise Start-ups to develop their project in compliance with the Turkish FinTech laws and regulations

We advise to start-ups who would like to invest in the field of FinTech. On many occasions, we advise the structuring of working models which will be exempted from the regulation and will not be subject to the supervision of Central Bank of Turkey.

Our experience in the field allows us to understand the FinTech ecosystem in Turkey and to provide a pragmatic and commercial approach with a focus to reach the desired outcome of our clients. Our clientele includes international and domestic clients to start, grow, or expand their business as FinTechs in the jurisdiction of Turkey under the supervision of the Central Bank of Turkey.

Can our business model be exempted from the payment services license in Turkey?

We evaluate the business model and advice whether the product and/or services are exempted from the operating license in Turkey.

According to Article 12/2, some business model, transactions, and services shall not be considered as a payment service within the scope of Law No. 6493 including but not limited to the following:

1. i) Payment transactions from payer to payee through a commercial agent authorized to negotiate or conclude the sale or purchase of goods or services on behalf of the payer or the payee,
2. ii) Payment transactions based on valuable papers, foreign bank’s cheques, traveler’s cheques, and paper-based postal money orders within the scope of the Law No. 6102,

iii) Payment transactions executed by the Bank, settlement institutions, central counterparties, clearinghouses, payment service providers and other participants of the system on behalf and account of their own in the systems,

1. iv) Services that are provided by technical service providers, without them coming into possession of the funds to be transferred at any time, support the provision of payment services, and include processing and storing data, trust and privacy protection services, data and entity authentication, information technology (IT) and communication network provision, provision and maintenance of terminals and devices used for payment services,
2. v) Services based on instruments that can be used to acquire goods or services only on the premises used by the issuer or under a commercial agreement with the issuer either within a limited network of service providers or for a limited range of goods or services,

How to obtain an operating License for PSPs in Turkey?

The provision of payment services within the borders of Turkey is subject to an operating license which shall be obtained from Central Bank of Turkey. Therefore; if a company intends to operate in the field of payment services, it can only do so with a license from the Central Bank of Turkey.

The general conditions are stated below:

The PSP is subject to the following conditions of eligibility:

1. The PSP must be established as joint-stock company under the Turkish Commercial Code.
2. Shareholders owning ten percent or more of the capital and holding control are required to meet the bank founder qualifications laid down in the Banking Law Nr. 5411.
3. Its shares should be issued against cash and to name.
4. The paid capital should not be less than 2 million Turkish Liras.
5. The PSP should have the required management structure, adequate personnel, and technical equipment which is required for performing the transactions under the scope of Law Nr. 6493 and departments handling complaints and objections.
6. The PSP should take precautions required for the continuity of the operations to be conducted under the scope of Law Nr. 6493 and for the preservation of security and confidentiality of the funds and information related to the payment service users.
7. It is required for a PSP to have a transparent and open partnership structure and organizational chart that will not constitute an obstacle for the efficient supervision of the Central Bank of Turkey.

How to obtain an operating License for E-Money Institutions in Turkey?

Pursuant to Article 18 of Law No. 6493, mobile wallet/e-wallet would involve the issuance of electronic money services and therefore require authorization from the Central Bank of Turkey as an 'E-Money Institution'. Therefore; if a company intends to operate in the field of e-money issuance, it can only do so with a license from the Central Bank of Turkey.

The general conditions are stated below:

E-money operating license is subject to the following conditions of eligibility:

1. E-money institution must be established as joint-stock company under the Turkish Commercial Code.
2. Shareholders owning ten percent or more of the capital and holding control are required to meet the bank founder qualifications laid down in the Banking Law Nr. 5411.
3. Its shares should be issued against cash and to name.
4. The paid capital should not be less than 5 million Turkish Liras.
5. E-money institution should have the required management structure, adequate personnel, and technical equipment which is required for performing the transactions under the scope of Law Nr. 6493 and departments handling complaints and objections.
6. E-money Institution should take precautions required for the continuity of the operations to be conducted under the scope of Law Nr. 6493 and for the preservation of security and confidentiality of the funds and information related to the payment service users.
7. It is required for an e-money institution to have a transparent and open partnership structure and organizational chart that will not constitute an obstacle for the efficient supervision of the Central Bank of Turkey.

The evaluation process of an application for the operating license

The license application under the scope of Law submitted to the Central Bank of Turkey will be reviewed and concluded by its Board within a period of six months after the date of submission. Nevertheless, the submission date is taken as the last date in which all information and documents related to the application are fully submitted. As a result;

If the decision is affirmative:

The license shall be granted by the Central Bank of Turkey to an applicant provided that requirements, qualifications, and competencies required under the scope of Law Nr. 6493 and its secondary legislation are met, the information and documents are submitted, and the application is regarded as affirmative by the Central Bank. Furthermore; a PSP who is granted an operating license must notify the Central Bank within 10 days from the commencement of operations.

If the decision is negative:

On the other hand, in case the decision is negative, the applicant must be informed of the decision with the reasons by the Central Bank of Turkey. However; the decision of the Central Bank of Turkey can be appealed before the Administrative Courts of Turkey.