Major Amendments Regarding the Code numbered 7192 on Payment Services, E-Currencies and Open Banking

Abstract

Upon developing fields in Turkey such as e-commerce and Fintech, it has been needed new regulations regarding the global integration of payment systems and e-currencies. In this regard, The Code numbered 7192 on Payment and Securities Settlement Systems, Payment Services and Electronic Money Organisations and amendments to related Law” (“Code’’) has entered into force in 01.01.2020 for this necessity. In the content of the Code, it is seen that there is no dual structure between Banking Regulation and Supervision Agency (BRSA) and the Central Bank of the Republic of Turkey (CB) and a legal base has been created for developments in Fintech, payment services, and e-currencies.

 

Explanations

The dual structure and control mechanism between CB and BRSA have been changed, it has been brought bring them together under a single roof with the Code ( Code Numbered 6493 on Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions, Banking Code numbered 5411, Code numbered 5464 on Bank Cards and Credit Cards, Code numbered 5549 on the Prevention of Laundering Proceeds of Crime were amended and the authorities within the BRSA on payment systems and e-currencies were transferred to the CB. Major) and a legal base has been created for developments in Fintech, payment services, and e-currencies.

 

  1. Two New Payment Service

The scope of payment services was expanded, and two new payment services were defined in the Code parallelly to PSD2 which had entered into force in 2016 having two-year adaptation period until September 2019. In this regard, the services below are considered as ‘payment services’ under the supervision of CB which was given the authority to determine every aspect of procedures and basis on data sharing among payment service providers:

  • Payment order initiation service offered by the payment account at another payment service provider at the request of the customer,
  • Providing consolidated information on the online platforms about one or more payment accounts of customer’s at payment service providers when customer approval is obtained.

 

2. Payment and Electronic Money Association of Turkey

As per the Code, the establishment of “Payment and Electronic Money Association of Turkey” was decided and the registration of all payment and e-money institutions as a member is mandatory within one month upon the establishment of the Association. In addition, the Association was tasked with the establishment of dispute resolution centre in accordance with the procedures and principles to be prepared by CB to ensure the final resolution of disputes among the members and their customers.

 

3. Transferred Duties and Powers of BRSA to Central Bank

The aim of the Code is that the dual structure and control mechanism between CB and BRSA have been changed and it has been brought bring them together under a single roof.

In this context, the regulation, supervision and audit functions of BRSA within the framework of the Code No. 6493 were transferred to the CB. While CB has become the competent authority for payments, has also the authority to supervise Financial Crimes Investigation Board obligations of payment and e-money institutions.

a. Clearing and Settlement Activities

With the amendment, the expressions regarding the payment system activities of clearing and offsetting are removed from the Code numbered 5464 and these activities are ensured to be under the authority of CB by eliminating the dual structure between BRSA and CB.

b. Authority to Determine Fees and Costs

Prior to the amendment, payment service providers could freely determine the fees they were going to receive for the services they provide. On the other hand, CB is granted the authority to determine fees and costs regarding a particular type of transaction under any name within this scope such as qualifications, maximum amounts or rates of fees, charges, commissions and other benefits received by one of the parties to the transaction and the authority to release them partly or fully.

c. CB Blockage on E-Currency Funds

Previously, the procedures and principles for reserving funds of e-money institutions in banks and blocking these funds in accounts held by the CB were regulated by BRSA through ‘Regulation on Payment Services, E-Currency Export and Payment Institutions and Electronic Money Institutions’. With the amendment, the procedures and principles of the said blockage were removed from the Law No. 6493 to be regulated by CB and the authority to determine which activities of e-money institutions fall within the scope of lending activities will also be regulated by CB through secondary legislation.

4. Scope of the Code in Terms of Total Size

Another important change is that with the authorization given to the CB, transactions made with pre-paid instruments and payment services reaching to a determined level in terms of total size may be included in the scope of the Code. In this respect, shopping cards which are open to in-house use and similar payment services may be subject to CB supervision if the limits to be determined by CB are exceeded.

5. Transitional provisions for Secondary Legislation

As of 1 January 2020, 1-year transition period is introduced for regulations to be issued by CB regarding the amendments in the Code and it is stated that previous regulations issued by the BRSA will remain valid during this period.

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