I Want to Establish an E-Money Institution in Turkey. How Should I Start?

Let's start by defining e-money.

In general terms, e-money is a monetary value stored on a secure technological device (such as a computer disk).

As defined by the regulatory authorities, e-money is a concept defined under Turkish law through legislation prepared by the BRSA (Banking Regulation and Supervision Agency), and it refers to a monetary value that is issued against funds received by the issuing institution, stored electronically, used to carry out the payment transactions defined in Law No. 6493 on Payment and Securities Settlement Systems, Payment Services, and Electronic Money Institutions, and accepted as a means of payment by natural and legal persons other than the issuing institution itself.

E-money services and payment services offered in Turkey are regulated service types, in line with global practices. E-money institutions have a broader scope of activity than payment institutions. For this reason, many companies obtain an e-money institution license to operate.

Regulatory and supervisory activities related to e-money and payment services are governed by Law No. 6493 dated 20/6/2013 on Payment and Securities Settlement Systems, Payment Services, and Electronic Money Institutions, along with the following secondary regulations issued based on this Law.

So, if I establish an e-money institution, which regulations do I need to take into account?

Below is the legislation that e-money companies are subject to.

• Regulation on Payment Services and Issuance of Electronic Money and Payment Service Providers
• (Repealed) Regulation on Payment Services and Issuance of Electronic Money, and on Payment Institutions and Electronic Money Institutions
• Regulation on the Generation and Use of the TR QR Code in Payment Services
• Regulation on the Non-Use of Crypto Assets in Payments
• Communique on the Information Systems of Payment and Electronic Money Institutions and on the Data Sharing Services of Payment Service Providers in the Field of Payment Services 
• (Repealed) Communique on the Management and Audit of Information Systems of Payment Institutions and Electronic Money Institutions

In this sector, which is regulated and supervised by the Central Bank of the Republic of Turkey (CBRT), many institutions have already completed the required licensing application processes and started operations after obtaining an operating license from the competent authority. Since the payments and e-money market is a sector that continues to grow thanks to developing digital technologies, many domestic and foreign investors continue their efforts to gain a foothold in this market.

Can we become an e-money institution without obtaining a license?

No. If you want to establish a company that issues e-money in Turkey, you must obtain an e-money institution license from the CBRT.

So, how is an e-money company license obtained from the CBRT?

First of all, in order to operate in the field of e-money issuance in Turkey, the relevant legislation requires the following preconditions for the establishment of an e-money company to be met;

• company type,
• type of share certificates,
• qualifications required of shareholders,
• minimum capital requirement,
• collateral/guarantee requirement,
• corporate governance,
• technical infrastructure and capacity,
• and a transparent and open ownership structure, among other preconditions.

Once the documents required for the e-money institution license application are fully prepared, the application submitted to the CBRT is taken under review. The e-money company's application is evaluated through a three-stage review process. If the application is approved, the applicant is granted an e-money institution operating license.

After obtaining the operating license:

• establishing the necessary infrastructure for the e-money company to continue its operations smoothly,
• conducting its operations in compliance with e-money legislation, AML/KYC regulations, and internal business processes,
• paying close attention to the necessary internal control and risk management processes,
• ensuring that legal and management reporting processes are carried out properly,
• and determining the ongoing training needs and obligations for headquarters, branch, and representative office staff are required.

If, in addition to issuing e-money, the company also wishes to provide payment services, it must obtain a payment institution operating license in addition to its e-money issuance authorization. The relevant legislation states that the services listed below are considered payment services for the purposes of the Law.

1. All transactions necessary for operating a payment account, including services enabling deposits into and withdrawals from the payment account
2. Money transfers involving the transfer of funds in the payment account held by the payment service user with the payment service provider, including direct debit transactions (including one-off ones), payment transactions made with a payment card or similar instrument, and standing orders
3. Issuance or acquiring of payment instruments
4. Money remittance
5. Payment transactions in which the sender's consent to carry out the payment transaction is given through an IT or electronic communication device, and the payment is made to an IT or electronic communications operator acting solely as an intermediary between the payment service user and the provider of goods or services
6. Services for intermediating bill payments
7. Payment initiation services provided, at the request of the payment service user, in relation to a payment account held with another payment service provider
8. Account information services providing, subject to the payment service user's consent, consolidated information online regarding one or more payment accounts the user holds with payment service providers

If the services listed above are to be provided in addition to e-money issuance, the license application must be made in a way that covers both e-money issuance and the payment services intended to be offered.