Türkiye is taking an important step that might affect the payment processes of foreign merchants that collect cross-border card based payment from users in Türkiye.
The relevant change in the legislation might particularly affect streaming services, SaaS services and other technology companies that provide subscription based services, among others.
Thus, the said digital platforms might have to review their payment services operations and their current relationships with business partners.
What is Happening?
The Draft Regulationon Amending the Regulation on Debit Cards and Credit Cards (“Draft Regulation”) has been published to the opinion of the sector by the Banking Regulation and Supervision Agency (“BRSA”) recently.
Among other changes in the Draft Regulation, the following one stands out in terms of cross-border card based payments;
“In the event that merchants residing abroad carry out activities aimed at people residing in Turkey, card issuers may approve transaction approval requests to be received via POS devices allocated to merchants residing abroad, only if such requests are received via the POS device of an entity that holds a license to operate as an entity concluding merchant agreements (i.e. acquirer) in Turkey.”
The BRSA has also specified the following criteria for foreign merchants to fall under the scope of “aiming at people residing in Türkiye”
- Establishing a business in Türkiye,
- Building a Turkish website,
- Performing promotion and marketing activities directly and/or through persons or entities residing in Türkiye regarding the goods and services offered.
Thus, any of the above situations shall be deemed to be directed to persons residing in Türkiye.
The Banking Regulation and Supervision Agency Board is also authorized to determine any additional criterion regarding falling under the scope of “aiming at people residing Türkiye”.
What Are Possible Affects?
If the Draft Regulation that is shared with the sector by the BRSA comes into force with it's current wording, service providers who provide services to users in Turkey and collect card based payments via POS of a foreign acquirer shall be obliged to obtain POS from a locally licensed acquirer. In the lack of same, card issuers would not approve transaction approval requests (i.e. authorization).
We consider that this change will cause service providers serving users in Turkey, especially via digital platforms, to review their payment services operations and their current relationships with business partners.
On the other hand, we are of the opinion that such a rule would cause a very big burden before the issuers since the Draft Regulation leave to make decision on “aiming at people residing in Türkiye” on issuers.
Considering the nature of workflow in the card based payments, issuers do not have a contractual relationship with the merchant, thus would have technically no idea as to whether the acquirer request authorization on behalf of a merchant aiming at people residing in Türkiye or not.
Even though no deadline has been indicated, it should be noted that BRSA is collecting sectorial feedbacks for the time being.
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.
