As of 27.06.2013 the Law on Payment and Security Settlement Systems, Payment Services and Electronic Money Institutions No. 6493 has entered into force following its publication at the Official Gazette dated June 27, 2013 and numbered 28690. The rationale behind the enactment of this law is to provide a regulatory framework for the payment and security settlement systems, payment services, payment institutions and electronic money institutions.

Particularly, the enactment of the afore-mentioned law brings out a complete new procedure and laid down strict conditions for the Payment and Electronic Money Institutions to be fulfilled in order to operate in those fields. For the main purpose of this informative piece, we will focus on the eligibility conditions for Payment and Electronic Money Institutions to be granted an operating license by the Banking Regulation and Supervision Agency (BRSA)

Following to the enactment of the Law numbered 6493, the Payment Services Institution who intends to operate in the field of payment services and Electronic Money Institution who intends to issue Electronic Money must obtain permission from the BRSA in pursuant to Article 14 Par.1 and Article 18 Par. 2 of the aforesaid Law respectively. Therefore, operating license shall be granted provided that requirements, qualifications and competencies required under the scope of the Law are met, the information and documents to be required by the Board are submitted and the application is regarded as affirmative by the Board and the decision for granting an operating license shall be published in the Official Gazette.

It is worthy at this point to grasp the conditions for the payment services and electronic money institutions separately. In order for them to operate within the scope of the Law, the documents which must be submitted to prove the fulfilment of the conditions under Article 14 and 18 are listed in the Article 8 of the Regulation on the Payment Services, Electronic Money Issuance, Payment Institutions and Electronic Money Institutions published in the Official Gazette dated June 27, 2014 and numbered 29043 (the Regulation).

Payment Services Institutions:

Art. 14 Par. 2 set forth the conditions of eligibility for the payment institutions.  According to provision, it is required for the applicant companies to be founded in the form of a joint-stock company whereas its 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 and its shares should be issued against cash and to name. This joint-stock company’s paid-up capital, consisting of cash and free of all kinds of fictitious transactions, should not be less than 1 million TL for payment institutions providing the services listed in subparagraph (e) of the first paragraph of Article 12 and not be less than 2 million Turkish Liras for other payment institutions. The applicant company is required to have management, adequate personnel and technical equipment required for performing the transactions under the scope of this Law and departments handling complaints and objections. It is also required to take precautions required for the continuity of the operations to be conducted under the scope of this Law and for preservation of security and confidentiality of the funds and information related to the payment service users. Furthermore, it is required to have transparent and open partnership structure and organizational chart that will not constitute an obstacle for the efficient supervision of the Agency.

Electronic Money Institutions:

The new enactment forbids issuing electronic money for those other than the banks operating pursuant to the Law Nr. 5411 and electronic money institutions granted with a permission to issue electronic money under the scope of the Law numbered 6493.  The conditions for the eligibility are defined under Article 18 Par. 3 of the Law. Applicant Company is required to be founded in the form of a joint-stock company whereas the 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 and its shares should be issued against cash and to name. The applicant company’s paid-up capital, consisting of cash and free of all kinds of fictitious transactions, should not be less than 5 million Turkish Liras.  It is also required to have management, adequate personnel and technical equipment required for performing the transactions under the scope of this Law and departments handling complaints and objections. The Applicant Company is also required to take precautions required for the continuity of the operations to be conducted under the scope of this Law and for preservation of security and confidentiality of the funds and information related to the electronic money users and to have transparent and open partnership structure and organizational chart that will not constitute an obstacle for the efficient supervision of the Agency.

Concluding Remarks:

As it can be seen from the above explanations, most of the conditions which are required to be fulfilled by the Applicants are more or less same for the Payment and Electronic Money Institutions.  Moreover, Article 5 Par. 2 of the Regulation put forward the requirement of having an expression in the title of the applicant company which indicates that the applicant company is working as payment or electronic money institution.

It should be noted that the BRSA has right to revoke the operating license in accordance with Article 16 provided that minimum its five members cast votes in favor of termination. Moreover, Article 17 regulates the situation of the automatic termination of the operating license.

It is quite important to be aware with the sentences which have been brought by the new regulatory framework as according to the Article 28 of the Law, real persons and officers of legal persons who act as a system operator, payment institution or electronic money institution without having the operating license required to be obtained pursuant to this Law shall be sentenced to imprisonment from one year to three years and judicial fine up to five thousand days.