Recently along with the developments in technology, we have been observing innovative and practical solutions as alternative to banks which carry out money transfers and payment transactions between people, and to the ‘physical money’ that has been used since the beginning of humankind. While until 2000s instruments of payment such as paper money, cheque, bond or credit card were used for making a payment, now, along with the development of internet and mobile technologies new payment systems have started to emerge. Foremost among these beyond any doubt, is electronic money which is going to bring about a fundamental change in our lives.
Electronic money practices are being applied, and regulated by various legal arrangements in Europe for a long time. In Turkey on the other hand, in order to clarify the evolving arrangements in this area and to support the practicality that it will establish in business life, it was decided to introduce a law. In this direction, The Law on Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions numbered 6493 (“The Law”) and published in 27 June 2013 dated Official Gazette officially came into effect on 27 June 2015, following 2 years of partial transition period.
In this paper, basic concepts and arrangements introduced by the concerned Law regarding electronic money will be examined.
Payment Service and Electronic Money
Article 12 of Law No. 6493 makes a statement regarding the definition of payment services and accordingly; all services in relation with operating the physical and virtual accounts that enable making payments, transferring amounts contained in these accounts or money transfers realized by other means; introducing the instruments of payment to the market, enabling realization of payments in electronic environment and intermediating for bill payments are within the scope of payment services.
The Law gives the definition of electronic money in definition section and accordingly; it means monetary value which is issued on the receipt of funds, used to make payment transactions and accepted as a payment instrument also by persons other than the electronic money issuer. To put it simply, electronic money is digital data having a monetary value, which exists not in physical but in electronic form.
To explain these defined concepts through an example, it will become clearer if we consider payment of utility bills, which has an important place in our daily lives. Namely, the transactions carries out by bill payment centers which are established for easy payment of bills are also included in the scope of payment service. Another example of electronic money is the prepaid cards that are used in various areas across the city such as transportation, parking lots and public toilets just by loading deposit into it.
Payment and Electronic Money Institutions
One of the purposes of introducing the Law No. 6493 is to bring the payment and electronic money sectors under control, and to regulate the structures of the organizations in relation thereof. In this context the Law stipulates that provision of payment services and issuance of electronic money shall be carried out only by companies and banks named as “payment institution” or “electronic money institution” which obtained authorization from the Banking Regulation and Supervision Agency (“BRSA”) by fulfilling specific conditions.
Article 14 and 18 of the concerned Law regulates the requirements to be met by these institutions. According to these articles, for authorization as a payment or electronic money institution, the companies should be established as a joint stock company, have the minimum capital stock required, establish internal audit and risk management units, take technical measures for system continuity and information security, and meet the bank founders eligibility criteria as set forth in the Banking Law No. 5411.
Obtaining authorization will be followed by a supervision phase which is regulated in Article 21 of the Law. Accordingly, these companies shall be subjected to supervision of both Banking Regulation and Supervision Agency and independent audit firms. What is aimed by this way is to control the payment services and electronic money areas, and to provide the final customers with safe, continuous and quality services.
Other liabilities to be met by the payment and electronic money institutions can be summarized as follows:
-To safeguard the funds held within the scope of the payment service or in exchange for electronic money, and to maintain collateral in the Central Bank of Turkey if required by BRSA,
-To maintain all information, documents and records regarding the transactions carried out and intermediated in a secure and accessible manner,
-To keep the information systems used for carrying out the activities within Turkey, and to take the necessary precautions for information security as well as those set forth in the Payment Card Industry Data Security Standards (PCI-DSS) such as identity authentication, fighting against security gaps, and risk management,
-To fight against payment irregularities, commonly known as fraud transactions, by also processing personal data if required,
-To meet the liabilities specified by The Financial Crimes Investigation Board (MASAK) aimed at combating crimes of laundering and terrorist financing, such as informing MASAK in case of suspicious transactions, authenticating the identities of persons who are offered services, and assigning a compliance officer within the institution,
-Not to operate in any areas that are not related to the carried out payment services or electronic money issuance.
Notwithstanding the legal dimension of electronic money, there is no doubt that it will revolutionize many daily problems thanks to its practical functionality. With becoming widespread of this new payment system, Turkish consumers will be protected against electronic money and payment systems and they will be able to carry out their transactions under guarantee of licensed firms.
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