Turkey: New QR Code Era for Cheques in Turkey!

With the introduction of a QR Code system on June 15, 2015, a new era for cheque users started. This system is expected to provide much transparency for the cheque users in their trade and ultimately decrease the number of bounced cheques and eliminate check frauds.

The QR Code system for cheques came into scene with the cooperation of Turkish Banking Institution, Credit Reference Bureau (CRB) (Kredi Kayıt Bürosu) and Turkish Union of Chambers and Commodity Exchanges. The system basically enables the cheque holders to be able to review data on the credibility of a cheque issuer.

How Will It Work in Practice?

Cheques are irreplaceable instruments in the global commercial life. Due to its nature, the ultimate holder of a cheque does not necessarily know the identity of the  issuer of the cheque.  Therefore, it is usually not possible to know the credibility of its issuer or whether the cheque is fake or it will be bounced, etc.

Cheque bearing a QR Code can be defined as a cheque printed by banks including a QR Code indicating the name/surname of the issuer, details of the bank and the branch, the bank account number of the issuer and the cheque number. For enjoying the benefits of QR Code cheques, necessary technical settings must be maintained. The technical infrastructure for using this innovative finance tool is developed by the CRB^[1], yet needless to say the cooperation of banks and integration of the banks' internal systems is essential in order for QR Code cheques to be effectively used in practice. The banks' involvement in this respect comes into scene, given that the QR Code cheques will be provided by the banks to their customers. In Turkey, Şekerbank has become the first bank that launched QR Code Cheque for the use of its customers^[2].

The technical infrastructure as established by the CRB for using QR Code cheques will involve a digital platform called Findeks. Findeks is established with the cooperation of certain banks in Turkey and the CRB. Findeks enables its users to pursue their credit ratings, credit debts and limits before the financial institutions and banks and this time it will be used as the digital platform for enjoying the benefits of QR Code cheques^[3].

By using Findeks application on their smart phones and being subscribed with Findeks, the cheque holders will be able to scan the QR Code on each cheque leaf.  After scanning the QR Code on the cheque leaf that they hold, cheque holders will be able to reach to the data on the accuracy and originality of the cheque and the former cheque payment performance of the issuer. 

The consent of the issuers enabling the potential cheque holders to review the summarized QR Cheque report will be given by the issuers to the bank for each separate cheque leaf, at the time of their application to the bank to receive a QR Code cheque. In other words, because a prior permission have been given for each cheque by its issuer at the outset, no further consents of the issuer will be required to be obtained for the cheque holder to review the summary cheque report via the QR Code.

What Does the Summary Cheque Report Say?

The cheque report which will be accessed through the QR Coded Cheque via Findeks application will basically provide for the date of the very first and last cheque as issued by the issuer of the cheque, ratio by % of the number and amount of the cheques which are paid by the issuer of the cheque on presentation, ratio by % of the number and amount of the cheques which are endorsed, defaulted on payment or still not paid by the issuer^[4]. Accordingly, by review of such report, the cheque holder will be able to understand/determine on whether there has been any forgery made on the cheque or not.

The summary report to be provided via Findeks application will be composed of details dated after 2009 for bounced cheques, and 2007 for paid cheques by issuers. Because this report is provided by Findeks based on the data that it receives from Turkish banks for each issuer, the issuer is expected to communicate with the banks directly in order to resolve on disputes or records that such issuer disagrees or objects^[5].

Is Using a QR Code Cheque Mandatory?

Absolutely not. Although the use of this new innovative tool will bring an important convenience to the trade, its use is not obligatory. Therefore, merchants may enjoy the benefits of a QR Code cheque or use regular cheques in their transactions, depending on their preference and needless to say the request of their creditor.

In any case, the expectation is that the majority of the merchants will be forced to use this newly introduced method in the future since the demand of their creditors will be as such, considering the reliability of QR Code cheques when compared to the regular ones. 

Expectations...

This newly introduced QR Code cheque system is aimed to provide transparency and give extra ease for determination of cheque fraud cases or prohibition of the same to a certain extent, if at all possible.  Needless to say QR Code cheques will not guarantee the payment of cheques by their issuers or eliminate bounced cheques completely; since the payment performance/credibility of the cheque issuers cannot ensure their future payment performances. In other words, the summary QR Code cheque reports only give an indication on the payment habits of the issuer and validity of the subject cheque. In practice, certain practitioners even claim that the QR Code cheque model is only a more straightforward version of the existing method on investigation by cheque number in digital.

Well, although QR Code cheques have officially become available as of June 15, 2015, implementation of the same in practice will still take some time due to the necessary integration period on both the banks' and the merchants' side.   In any case, the amount of cheques presented to banks for the period of January-May 2015 has increased by 11% since the corresponding period in 2014 and has reached to an amount of 247 billion Turkish Liras^[6].  The number of bounced cheques has increased by 12% for the period of January-May 2015 when compared to the corresponding period in 2014^[7]. Therefore, considering this high cheque traffic in domestic market, any innovative method which will reduce the risks with respect to cheques is important and thus the QR Code cheques.

What is Next?

There have been news in Turkish media recently, stating that as a follow up to the QR Code method for cheques, now letters of credits are also contemplated to be used in electronic format in the near future as part of the future prospects of the CRB.  So, we all will wait and see.