Payment Gateway in Turkey

1. Understand the Market and Business Scope

Before establishing a PSP in Turkey, it’s essential to:

• Conduct Market Research: Understanding local needs, competition, and potential clients is crucial.
• Define Services: PSPs can offer various payment services, such as online payment processing, e-wallet solutions, POS systems, and cross-border payments.
• Target Audience: Determine if the PSP will serve e-commerce businesses, freelancers, SMEs, or enterprises with cross-border payment needs.

2. Regulatory Framework for PSPs in Turkey

The Central Bank of the Republic of Türkiye(Cental Bank)  regulates PSPs under Law No. 6493 on Payment Services and Electronic Money Institutions. Understanding this legal framework is essential before proceeding with the PSP application process.

• Law No. 6493: Enacted in 2013, this law governs all payment and electronic money institutions, aiming to ensure a secure and transparent financial services market.
• Central Bank Licensing: PSPs must obtain a license from the Cental Bank, and meeting its criteria is a crucial step toward operating legally.

3. Establish a Legal Entity in Turkey

To operate as a PSP, establishing a legal entity within Turkey is mandatory.

• Company Structure: Most PGPs are registered as Joint Stock Companies (JSCs) due to capital requirements and regulatory preferences.
• Corporate Headquarters: The headquarters must be located in Turkey, and all operations should be traceable by Turkish authorities.
• Shareholder Requirements: Both foreign and local shareholders can own shares, though clear documentation on ownership must be provided to the Central Bank.

4. Meet the Capital Requirements & Other Collateral

Central Bank imposes specific capital requirements for PSPs to ensure financial stability and risk management. For 2024, the minimum initial capital requirements for PSPs are as follows:

• Minimum Initial Capital: PSPs must have at least 20 million TRY (Turkish Lira) in paid-up capital. This amount may vary depending on the services offered and is periodically reviewed by the Central Bank.
• Paid-in Capital: The capital must be fully paid and deposited in a Turkish bank before licensing.

5. Submit a License Application to the Central Bank

Obtaining a Central Bank license is one of the most crucial steps in establishing a PSP in Turkey. The application process includes several detailed steps:

• Prepare Required Documents: These include business plans, financial projections, risk assessment strategies, and data protection policies.
• KYC and AML Policies: The Central Bank requires comprehensive Know Your Customer (KYC) and Anti-Money Laundering (AML) policies to prevent fraud and ensure security.
• Pay the License Fee: The license fee of 1 Million TRY must be paid to the Central Bank account and the receipt must be attached to the application form.
• Application Submission: Submit your application and all necessary documents to the Central Bank, along with the application fee of 500 Thousand TRY
• Approval Timeline: The approval process can take several months, depending on the thoroughness of the application and Central Bank’s assessment. During this time, the Central Bank may request additional documentation or clarifications.

6. Develop a Secure IT Infrastructure

In compliance with Central Bank and Personal Data Protection Law (KVKK) requirements, PSPs in Turkey must implement a secure IT infrastructure:

• PCI-DSS Compliance: PSPs handling card transactions must comply with Payment Card Industry Data Security Standards (PCI-DSS), ensuring data security.
• Data Encryption and Protection: Secure data encryption and storage are mandatory for protecting customer information.
• Fraud Prevention: Implement fraud detection systems and algorithms to detect suspicious activities, ensuring safe transactions for all users.

7. Appoint Key Personnel

To meet regulatory and operational requirements, PSPs must appoint key personnel, including:

• Compliance Officer: Responsible for ensuring compliance with Central Bank regulations, KYC, and AML policies.
• IT and Security Experts: Handle data security, fraud prevention, and PCI-DSS compliance.
• Customer Service Team: Manage client relationships and provide support to PSP users.

Central Bank requires the appointment of qualified and experienced professionals to oversee these critical roles and ensure operational compliance.

8. Implement Effective Customer Support

Customer service is essential for PSPs, as they must handle payment-related issues quickly and efficiently:

• 24/7 Support: Consider offering around-the-clock customer support for issues such as transaction disputes, payment failures, and technical support.
• Multilingual Support: Providing support in multiple languages can be a competitive advantage, especially for PSPs working with international clients.
• Clear Fee Structure: Clearly communicate any transaction fees, refund policies, and terms of service to customers to enhance transparency and build trust.

9. Begin Operations and Compliance Reporting

Once licensed, PSPs must maintain compliance with Central Bank reporting and operational requirements:

• Monthly and Quarterly Reports: PSPs must submit regular financial and operational reports to the Central Bank, including information on transactions, risk management, and compliance with KYC/AML requirements.
• Annual Audits: PSPs are subject to yearly audits by Central Bank to ensure they meet operational standards and regulatory compliance.
• Fee Disclosure: Central Bank requires PSPs to provide transparent fee structures, so clients are aware of transaction costs, service fees, and any potential hidden charges.

10. Marketing and Expanding Your PSP

With all regulatory requirements met, PSPs can focus on growth and expansion:

• Target Marketing: Define your niche, such as e-commerce businesses, SMEs, or freelancers, and tailor marketing campaigns to reach these audiences.
• Partnerships with Banks and Fintechs: Forming partnerships with Turkish banks and other fintech companies can strengthen your offerings, such as enabling installment payments or mobile wallet solutions.
• Innovative Payment Solutions: Stay competitive by offering unique features like recurring billing, buy-now-pay-later options, and loyalty rewards for users.