The Central Bank of the Republic of Türkiye published the Guidelines on Correlating Business Models in the Field of Payments with Payment Service Types (“Guidelines”).
The Guidelines provide detailed explanations as to how payment services regulated under the Law No. 6493 on Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions (the “Law”) and the Regulation on Payment Services and Electronic Money Issuance and Payment Service Providers (the “Regulation”) can be correlated with the business models in the field of payments, in order to ensure compliance with the regulations and uniformity in operating licenses to be granted by the CBRT for authorizations. You can access the Guidelines here.
What do the Guidelines say?
- The Guidelines evaluate the business models in the field of payment services and clarify which of these business models must be considered a “payment services” within the scope of Article 12, paragraph 1 of the Law and under which provisions of the Law, the CBRT permission must be obtained.
- The Guidelines further evaluate under which provisions of the Law, the CBRT permission must be obtained for payment account operation, money transfer, virtual POS, physical POS, electronic money issuance and acceptance, digital wallet, mobile payment, and mobile payment intermediation business models.
- The Guidelines clarify the scope of the services deemed payment service under the Law:
- All transactions to operate a payment account, including the services enabling cash to be deposited into a payment account and cash to be withdrawn from a payment account
These transactions include services provided by the payment institution, such as opening a payment account, depositing money into the payment account and withdrawing money from the payment account.
- Payment transactions, including fund transfers to a payment account of the payment service user before the payment service provider, direct debits (including one-off direct debits), the execution of payment transactions through a payment card or a similar device, and the execution of money transfers, including regular standing orders
This type of payment service includes the transfer of funds from a payment service user’s payment account to another payment service user’s account with any payment service provider.
- Issuing or acquiring payment instruments
“Issuing a payment instrument” refers to the process by which the payment service provider makes the payment instrument available to the payment service user to initiate and process payment transactions by assuming legal responsibility for the payment instrument under the contract signed with the payment service user.
“Acquiring payment instrument” involves the process of providing a service for the transfer of funds to the merchant by acquiring and processing payment transactions for the use of payment instrument with the merchant under the contract signed by the payment service provider with the payment service user.
- Money remittance
For this type of payment service, the Guidelines clarify that, at least one of the sender or the recipient must not have been opened an account. Furthermore, the Guidelines note that the funds must be transferred by the sender to the recipient or the payment service provider acting on behalf of the recipient. However, the Guidelines also stipulate that fund transfers between payment accounts opened in the name of the sender and the recipient are deemed money transfer rather than money remittance.
- Payment transactions where the payer’s consent to execute a payment transaction is given by means of any information technology or electronic telecommunication device, and the payment is made to the information technology or electronic telecommunication operator acting only as an intermediary between the payment service user and the supplier of the goods and services
The Guidelines underline that this type of service is described as “mobile payment service” in the sector.
The Regulation has mitigated the concern that the option for payment of the price at a later date where the customer has already received the goods/services within the scope mobile payment services can be considered as extending loan. The Regulation has also clarified that the collection of the amount to be paid until the due date of the invoice issued by the information technology or electronic telecommunication operator acting as intermediary will not be deemed as extending loan and that for payment services performed within this framework, the institution cannot make a payment to the recipient or guarantee the payments to be made unless the amount of the goods or services is collected.
Pursuant to the Guidelines, it is advisable for payment institutions to follow a cautious approach to pay utmost attention to the provisions of the Law and the Regulation for the cases where the payment institutions execute “Succession Agreements” with a third party company in order to mitigate the risk for the merchants.
- Intermediation of invoice payments
This payment service relates to the intermediation of payments arising out of continuous business relationships based on a subscription agreement. The scope of these invoice payments is regulated under the Regulation as payments made for the provision of utility services, as well as other payments deemed appropriate by the CBRT.
- Payment order initiation service where the payment account is maintained by another payment service provider, upon the payment service user’s request
The Guidelines explain that within the scope of this payment service type, the payment order initiation service provider (PISP) enables payment service users to benefit from payment order initiation services by accessing their payment accounts with the payment service provider holding the payment account.
Parties to the payment order initiation service are the payment service user, the account service providers and the PISP. The Guidelines summarize the process visually by including a table on the Basic Workflow of the Payment Order Initiation Service.
- Presenting the consolidated data relating to one or more payment accounts maintained by payment service providers on online platforms
Under this payment service, account information service providers (AISP) compile information on a payment service user’s accounts with different account service providers and make it available in aggregated form on online platforms. The Guidelines summarize the process visually by including a table on the Account Information Service Workflow.
- Issuance of electronic money
By referring to the Law, the Guidelines underline that issuance of electronic money is not a payment service but a value that is used in payment services. The Guidelines further include explanations on differentiating the account in which the electronic money is deposited from the payment account used in the provision of payment services and in which funds are deposited, as well as the business models of the instruments through which electronic money may be issued. It addition, business models designed to be used as a payment instrument at a merchant place are likely to be deemed electronic money, but it is still useful to conduct both technical and legal examination on a case-by-case basis in light of the general principles.
The Guidelines are important in terms of clarifying the activities that are deemed payment services and e-money under the Law and the Regulation, and providing guidance to those who wish to engage in these activities.
By Muhsin Keskin, Partner, Can Sozer, Partner, Aybuke Gundel Solak, Senior Associate, Nihat Aral, Associate, Esin Attorney Partnership