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It is observed that the new tools are integrated into our lives apart from the classical methods used for many years as the technology is developing in money transfers and payment transactions. It is possible to easily determine the scope of the development of the sector in our country when we consider that the investment made in this industry in our country was 12.2 million dollars in 2018 and 8.4 billion dollars in 2019 as well as the increase in the number of entrepreneurs who secured investment in 2019.
The legislation has been amended and also new legislations have been introduced parallel to the developments in the world of financial technologies that are commonly called “Fintech” and to comply with the European Union legislation
In the scope of the aforementioned regulations, the foundations of legal infrastructure have laid with the “Law on Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions” (“Law”), which came into force in 2013. In this article, basic points about electronic money institutions and payment services will be mentioned following the legislation.
II. ELECTRONIC MONEY INSTITUTIONS
Electronic money, which can be frequently heard by the names of examples such as Bitcoin, Altcoin, Ethereum in recent years is defined in the Law as follows:
“monetary value that is issued equivalent the funds accepted by the electronic money issuer institution, stored electronically and used to provide the payment transactions defined in the Law and accepted as a means of payment by real and legal persons other than the electronic money issuer institution”
In this respect, it is one of the innovations brought by the technology that enables payments to be made widely to enterprises other than the issuer institution without the use of classical payment methods and provides to save the monetary values electronically. As a result, electronic money can be used for the purchase of all types of goods and services in any institution that accepts the instrument.
Electronic money institutions are defined as a legal entity which has the authority to issue electronic money in the scope of the Law. The features that electronic money institutions should have and their purpose of the establishment are clearly stated in the Law. Electronic Money institutions are also stated as a payment service provider in article 13 of the Law with payment institutions. Payment services are defined in Article 12 of the Law as follows: “Several fields that are counted in detail such as all necessary transactions for the operation of the payment account including services that allow depositing and withdrawing money from the payment account, bill payments, money transfers, mobile payments”. The legal entities which can issue electronic money are stated in article 18 of the law as electronic Money institutions that have the official authorization, Turkish Post and Telegraph Company and Banks operating under the Banking Law.
The application authority related to obtaining the license of electronic money institutions was the Banking Regulation and Supervision Authority (“BRSA”) before the 01.01.2020. In line with the requirements arising in the field of payments, the BRSA’s license authority has been transferred to the Central Bank (“Bank”) as from the 01.01.2020 with the law numbered 7192 Amendments to the Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions and to Some Laws which was published in the Official Gazette dated 22 November 2019 and numbered 30956. Therefore, the institutions that have not yet received a license will require to submit their applications to the Bank. Currently, there are 18 active electronic money institutions published by the Central Bank.
To obtain such a license, the minimum capital specified in the Law and the existence of some financial and structural conditions are sought. Besides, the institution which considers to obtain official authorization shall have the following qualification:
- Establishing as a joint-stock company.
- Those holding ten per cent or more of the shares of the capital and have control shall carry the qualifications required for bank founders in the Banking Law,
- Share certificates shall have cash cover and all of them shall be in the name of the holders,
- Full paid stock capital shall be at least five million Turkish Liras,
- The institutions shall have management, sufficient personnel and technical equipment and as well as shall establish units for complaints and objections,
- Necessary measures shall be taken regarding the continuity of the activities and the confidentiality of the user information,
- The institution shall have a transparent and open partnership structure and organizational chart,
Electronic money institutions with these qualifications can be in service through banks operating under the Banking Law. If the institution which has the qualifications above provides conditions and competence following the Law and completes all documentation that will give to the Bank, the bank may decide that the application is approved. In case of a positive decision, the official authorization shall be given to the institution to be in service as an electronic money institution and the decision of official authorization is published in the Official Gazette.
III. PAYMENT INSTITUTIONS
Another one of the payment service providers in the Law is payment institutions. Payment institutions, like electronic money institutions, are subject to the obligation to obtain an official authorization license from the Bank. The institution which considers to obtain official authorization shall have the following qualification:
- Establishing as a joint-stock company
- Those holding ten per cent or more of the shares of the capital and having control shall have the conditions required for bank founders in the Banking Law
- Share certificates shall be in the name of the holders
- Payment institutions that mediate bill payments shall have at least one million Turkish Liras capitals and other payment institutions shall have at least two million Turkish Liras capitals
- The institutions shall have management, sufficient personnel and technical equipment and as well as shall establish units for complaints and objections
- The necessary measures shall be taken regarding the continuity of the activities and the security and confidentiality of funds and information related to payment service users
- The institution shall have a transparent and open partnership structure and organizational chart
The institutions that have these qualifications require to apply to the Bank as the same process of electronic payment institutions. If the application is deemed appropriate by the bank, the institution can be in service as a payment institution. Payment institutions can operate in the areas specified in article 12 of the Law and it should be clearly stated for which of the fields specified in the official authorization application.
Besides the qualifications which are necessary to obtain official authorization document for payment institutions, activity fields of payment institutions are limited with some points. Payment institutions are prohibited from crediting, issuing electronic money or being in other commercial activities.
Articles of incorporation of the payment institutions should not include such provisions that may engage in any other trade of goods and services in the scope of limitations of the Law. In the case of payment, institutions go beyond the permitted activities, the official authorization license may be canceled by the Bank or the applications made may be rejected without being evaluated. There are 34 payment institutions established and active following the Law in our country until now.
Today we see the fact that technology is changing the dynamics of financial transactions and the financial world day by day. It is clear that the regulations of the countries in this regard will be affected by these developments over time and will continue to meet the requirements. Especially, technologies such as blockchain and open banking, which are expected to increase further in the coming years, are expected to develop in our legislation. The reflections of the developments to be experienced in the relevant EU acquis, especially in fintech and environment issues, also come to the fore as important points to be observed.