Turkey

ACI’s Take

Turkey’s hoped-for accession to the European Union — and the degree of upfront regulatory alignment that is required — is a major driver of current real-time payments development in the country, alongside its mission to achieve a cashless market by 2023.

It has a strong foundation for both of these aims in the shape of the FAST real-time payments system. Designed from inception to be multi-functional, supporting a wide range of use cases — in-store, P2P, bill-paying and so on — FAST also features standardized QR codes and an Easy Addressing System. And the Turkish government refuses to lift its foot from the gas. From mandating all
payment and electronic money institutions to join the Association of Payment and Electronic Money Institutions of Turkey, to the Turkish Central Bank’s banning of crypto currency (directly or indirectly) as an instrument of payment, it continues to take a proactive role in shaping the real-time payments infrastructure.

As a potential EU member, Turkey receives pre-accession assistance under the new Instrument for Pre-accession Assistance (IPA III) scheme, which supports countries in adopting and implementing key economic reforms to comply with EU values and progressively align to EU rules, standards and policies. So far, as open banking is concerned, anything that happens in Europe will be mirrored in Turkey, which has already announced compliance with PSD2 and will comply with whatever enhancements the European Commission mandates when it reviews the Directive. This brings an element of simplicity and predictability to payment modernization roadmaps.

One complicating factor, however, is the potential for future tension as the Turkish government seeks to maintain control of the technological direction of travel. PSD2 provides a current example: while the Directive mandates certain third-party access to bank-held consumer data, under Turkish law it is not clear if a bank is obliged to do this. Banks and institutions should also monitor the government’s progress in resisting the expansion of Big Tech players. This is evident in its approach to social media — with several government departments publicly stating a preference for Turkcell’s BiP messaging service versus Facebook’s WhatsApp, for example — which has implications for the incorporation of real-time payments into mobile apps.

Yet overall, the government’s involvement bodes well for payments transformation, not least because imposition of systems from the top down is more possible than in other territories. Given that high cash use (still over 60%) provides ample room to grow, with continued regulatory involvement — and patience — Turkey could grow into one of Europe’s largest real-time markets by volume.