The Regulation on Payment Services and Issuance of Electronic Money and Payment Institutions and Electronic Money Institutions ("Regulation") based on the Law on Payment and Securities Settlement Systems, Payment Services and Electronic Fund Institutions No. 6493 ("Law") was amended with the Regulation Amending the Regulation on Payment Services and Issuance of Electronic Money and Payment Institutions and Electronic Money Institutions ("New Regulation"), which was published in the Official Gazette on October 12, 2018. The amendments entered into force on the same day.
In a nutshell, the significant amendments introduced by the New Regulation are as follows:
- The Turkish Post Office (i.e., "Posta ve Telgraf Teşkilatı Anonim Şirketi") has been designated as an electronic money issuing institution and as a payment services provider.
- Institutions providing intermediary services for invoice payments can now outsource these services to a bank in order to be exempt from the obligation to enter into contracts for intermediary services for invoice payments, without the requirement for an additional authorization to be granted to the banks through a contract.
- With Article 8/5 of the New Regulation, the Banking Regulation and Supervisory Agency ("Agency") has been imposed with the obligation to conduct an examination with regard to the management structure, personnel, technical equipment and order of registry and documents of the payment and electronic money institutions, subsequent to the evaluation of the information and documents following license applications mandatory for providing payment services or issuing electronic money.
- Institutions can conduct the activities regarding the payment services set forth under Article 12(1) of the Law, as long as such activities are limited to the ones specified in the license applications. Obtaining the permission of the Banking Regulation and Supervisory Board ("Board") has become compulsory regarding the activities contemplated for providing payment services, which are not shown on the license application but regulated under Article 12/1 of the Law. Two additional services have been added to the operational domain of payment institutions: (i) subsidiary services that supplement the payment services, such as card reservations, processing card information, and preventing misconduct and fraud in order to deliver payment services and to ensure that the activities of the payment service providers are safe and secure, and (ii) educational and advisory services regarding electronic money issuance or payment services in relation to rendering payment services.
- Two additional services have been added to the operational domain of electronic money institutions: (i) subsidiary services that supplement the issuance of electronic money or payment services, such as card reservations, processing card information, and preventing misconduct and fraud in order to deliver payment services and to ensure that the activities of the payment service providers are safe and secure, and (ii) educational and advisory services regarding electronic money issuance or payment services in relation to (i) exporting of electronic money, or (ii) rendering payment services.
- The Board is now entitled and authorized to introduce a requirement for the relevant institutions to maintain additional equity in order to continue their businesses.
- In cases where an institution conducts its business through a representative, the representative has been prohibited from providing payment services through sub-representatives using the titles of "agency," "distributor," or other similar names.
- The Agency has now become authorized to grant additional time regarding the submission of the independent audit report of the year-end statements of such institutions, in cases where the Agency finds it necessary and appropriate, upon the institution's request.
- Funds that are received via a "point of service" (as defined under the "Communiqué on the Management and Auditing of Information Systems of Payment Institutions and Electronic Money Institutions") will now be transferred to the electronic money reservation account when the funds are transferred to the electronic money institution's account or when they are otherwise made ready for the use of the electronic money institution. The transfer period of these funds to the electronic money reservation account cannot exceed five (5) business days from the date of issuance of the electronic money.
- As per Article 28/2 of the Regulation, institutions providing intermediary services for invoice payments may keep a guarantee as a lease certificate, instead of a domestic government bond, at the Central Bank of Turkey. Moreover, in case an institution keeps the guarantee as a lease certificate or as a domestic government bond at the Central Bank of Turkey, and the guarantee loses at least 10% of its market value, the institution is obliged to complete (i.e., supplement) the guarantee to 1 million Turkish Liras within ten (10) business days and also required to notify this to the Agency.
Finally, the branches or agencies of institutional representatives (that provide payment services) were required to sign a written contract with the relevant institution by December 31, 2018.
This article was first published in Legal Insights Quarterly by ELIG Gürkaynak Attorneys-at-Law in March 2019. A link to the full Legal Insight Quarterly may be found here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.