The short version
Historically described as ‘a barrier and a bridge’ between Asia and Europe, this week we focus on how money moves in Turkey. A nuanced and multi-faceted story emerges: Current economic challenges contrast the optimism of buoyant trade partnerships and an emerging payments market. In the past few years, there have been significant developments in the regulatory landscape in line with international standards and changes in the industry.
The long version
The Republic of Turkey (Turkish; Türkiye Cumhuriyeti) is strategically situated at an intersection between continents. It controls the main access point to the Black Sea. Istanbul, formerly known as Constantinople, lies on the Bosporus Strait at the meeting point of Asia and Europe and is at the center of the country’s economy, culture and history. Istanbul is the largest city in Turkey and the most populated city in Europe with over 15 million residents. The nation’s capital city, Ankara is situated in central Anatolia and the country’s second largest city with 5 million residents. Turkey is surrounded by three major seas: the Mediterranean in the south, the Aegean in the west, and the Black Sea in the north.
The Turkish population is estimated at just over 85 million in 2022 with a median age of 30.6 years. Its cosmopolitan people speak an impressive 70 languages and dialects across the country, with Turkish being the official language and mother tongue for most. Turkey is shown to be a youth-driven nation with 48.3% being below 30 years old. Internet penetration is on the rise, a recent study revealed that Turkey is highly tech-driven with 66 million having internet access and of that, 94% of the users access the internet largely via smartphones. According to 2022 immigration data, the largest expat group is from Russia (25%), followed by Ukraine (8.1%), Iran (6.5%), Afghanistan (5.4%) and Iraq (4.8%). This is contrasted by a steady emigration of Turkish workers to European and other Arab nations over the past few decades. At the turn of the century, there were an estimated 6 million Turks working abroad.
Since the early 20th century, Turkey has focused on industrialisation. While it has a variety of natural resources, it could not rely on their limited reserves to generate wealth compared to the rest of the region. The local textile industry is one of the most significant revenue drivers for the country, emerging as the 5th largest textile exporter globally, and accounting for around 7% of Turkey’s gross domestic product (GDP). In March this year, the United Arab Emirates (UAE) and Turkey signed a trade agreement as the UAE earmarked Turkey for growth and created a $10 billion investment fund. Today, Turkey is the 6th largest non-oil trading partner for the UAE with bilateral trade totalling $18.9 million for 2022, up 40% from the previous year. Data from the Turkish Statistical Institute and the Ministry of Trade indicated exports were up 4.4% and imports increased by 3.4% in March 2023 compared to the same time last year. However, inflation-related challenges have been a part of the landscape intermittently since the late 1970s. In recent years, critics have watched Turkey face significant economic challenges - rising inflation, currency instability and increased debt. It’s reported that the Turkish lira (TL) has devalued against the US Dollar by 50% since the beginning of this year and inflation has reached just over 60%. President Recep Tayyip Erdoğan has been the leader of this democratic nation since 2014. Interestly, the Central Bank of the Republic of Turkey (CBRT) is controlled by the government, unlike most other developed countries. This contributes to the complexities of the Turkish economic outlook as fiscal and monetary policies are intrinsically interlinked.
The Turkish banking industry is a trailblazer when compared to the rest of the region. The first credit card was issued in 1968 and the first point of sale (POS) terminal was operational in 1991. Turkey was the first European nation to issue contactless credit cards in 2006 and the third (behind France and the United Kingdom) to introduce chip and pin features. The World Bank reports most Turkish adults are banked - at an impressive rate of 73%. The remaining unbanked population are largely farmers, traders and are mostly women. Major local banks include Ziraat Bankasi, Türkiye Bankasi, Garanti BBVA, Akbank and YapiKredi. The innovative approach to banking spills over to their view on Fintech. Since the 2010s, local banks have been driven to invest in fintechs - through offering funding, accelerator programs and incubators - rather than compete with them. For example, Turkish Economy Bank (TEB) established TEB Private Angel Investment Platform as one of the first Turkish angel investor networks and İşbank acquired Moka, a payment service provider (PSP) offering mobile payments, in July 2020.
The Digital Türkiye vision coupled with the National Technology Move are local initiatives aimed to support Turkey through its next stage of technological evolution. The government actively supports digital transformation to “not only help Türkiye maintain its financial stability, security and development; but utilize new economic resources, seize opportunities in global finance and technology and increase economic literacy". In December 2022, the finance ministry reported signifcant statistics on the state of payments, fintech and banking on a macro level. Of 629 Fintechs, 250 are in payments, 92 are blockchain-oriented and 89 are banking tech companies. There are currently 74 licensed payment and e-money fintechs. A major industry milestone was achieved in 2019 when local fintech, iyzico was acquired by PayU for $165 million - one of the largest startup exits in the country.
When looking at local payments, the current trends stand out:
Cash is still dominant, recorded as a method of payment for 40% of POS transactions in 2022. This is largely value dependent. For transactions below 20 TL, 91% surveyed were in cash while transactions above 100TL, 60% were in cash. However, the pandemic brought a wave of adoption for contactless payments.
An analysis of card usage indicates there are an estimated 93,8 million credit cards and 66,3 million pre-paid cards in December 2022. Government reports suggest it has the 7th greatest credit card ownership in the world and the leading market in Europe. Credit cards are widely accepted especially in large cities and tourist spots with Visa and Mastercard being the leading card schemes. Domestic bank issued cards account for 60% of all online transactions such as Yapi Kredi, QNB Finansbank, and Akbank. Cash alternatives are not just sitting in card payments alone. Like the rest of the region, mobile payments are a major feature in the payments market. Top mobile wallets are Papara, Fastpay, Pay Cell, Maximum Mobile and Yapi Kredi Mobile. In 2020, CBRT also enabled QR codes to decrease cash reliance for both merchant and person-to-person transactions. Yet, Turkey is distinct when looking at MENA payments as it has highly stringent laws around data processing (much like India and China). Off the back of this, Apple Pay and Google Pay are not yet available locally.
Turning to regulation, payment systems, electronic money institutions and payment institutions are regulated and licensed by CBRT. Over the past few years, there have been developments in the regulatory approach for Turkish payments companies and Fintechs. The payments regulatory body shifted from Banking Regulatory and Supervision Agency (BRSA) to CBRT in 2019 . CBRT has taken strides to enable fintechs to support digital transformation in the financial sector. Echoing the European payments legislation, firms are defined as Payment Institutions (PI) and Electronic Money Institutions (EMI). The Law on Payment and Security Settlement Systems, Payment Services and Electronic Money Institutions No. 6493 governs local payment services. Since April 2022, the capital requirements are as follows:
Payment institutions enabling bill payment intermediary services = TRY 5.5 million
Institutions that offer other payment services = TRY 9 million
Electronic money institutions = TRY 25 million
Secondary legislation, "Regulation on Payment Services, E-Money Issuances and Payment Service Providers" was published by CBRT in December 2021 to define principles and procedures for both PIs and EMIs. The legislation introduced new terms of "prepaid instrument" and "anonymous prepaid instrument". Plus, it detailed the conditions for electronic money. There is currently talks of a regulatory sandbox to be offered to startups in order to test their innovation within a safe environment.
Turkey holds opportunity for payments. With its significant market size, progressive regulator and fintech friendly banking sector, it’s a unique space for newcomers. If your business has Turkey on its roadmap, reach out to us on how Fuse can help you access the region with a single API.
The Republic of Turkey (Turkish; Türkiye Cumhuriyeti) is strategically situated at an intersection between continents. It controls the main access point to the Black Sea. Istanbul, formerly known as Constantinople, lies on the Bosporus Strait at the meeting point of Asia and Europe and is at the center of the country’s economy, culture and history. Istanbul is the largest city in Turkey and the most populated city in Europe with over 15 million residents. The nation’s capital city, Ankara is situated in central Anatolia and the country’s second largest city with 5 million residents. Turkey is surrounded by three major seas: the Mediterranean in the south, the Aegean in the west, and the Black Sea in the north.
The Turkish population is estimated at just over 85 million in 2022 with a median age of 30.6 years. Its cosmopolitan people speak an impressive 70 languages and dialects across the country, with Turkish being the official language and mother tongue for most. Turkey is shown to be a youth-driven nation with 48.3% being below 30 years old. Internet penetration is on the rise, a recent study revealed that Turkey is highly tech-driven with 66 million having internet access and of that, 94% of the users access the internet largely via smartphones. According to 2022 immigration data, the largest expat group is from Russia (25%), followed by Ukraine (8.1%), Iran (6.5%), Afghanistan (5.4%) and Iraq (4.8%). This is contrasted by a steady emigration of Turkish workers to European and other Arab nations over the past few decades. At the turn of the century, there were an estimated 6 million Turks working abroad.
Since the early 20th century, Turkey has focused on industrialisation. While it has a variety of natural resources, it could not rely on their limited reserves to generate wealth compared to the rest of the region. The local textile industry is one of the most significant revenue drivers for the country, emerging as the 5th largest textile exporter globally, and accounting for around 7% of Turkey’s gross domestic product (GDP). In March this year, the United Arab Emirates (UAE) and Turkey signed a trade agreement as the UAE earmarked Turkey for growth and created a $10 billion investment fund. Today, Turkey is the 6th largest non-oil trading partner for the UAE with bilateral trade totalling $18.9 million for 2022, up 40% from the previous year. Data from the Turkish Statistical Institute and the Ministry of Trade indicated exports were up 4.4% and imports increased by 3.4% in March 2023 compared to the same time last year. However, inflation-related challenges have been a part of the landscape intermittently since the late 1970s. In recent years, critics have watched Turkey face significant economic challenges - rising inflation, currency instability and increased debt. It’s reported that the Turkish lira (TL) has devalued against the US Dollar by 50% since the beginning of this year and inflation has reached just over 60%. President Recep Tayyip Erdoğan has been the leader of this democratic nation since 2014. Interestly, the Central Bank of the Republic of Turkey (CBRT) is controlled by the government, unlike most other developed countries. This contributes to the complexities of the Turkish economic outlook as fiscal and monetary policies are intrinsically interlinked.
The Turkish banking industry is a trailblazer when compared to the rest of the region. The first credit card was issued in 1968 and the first point of sale (POS) terminal was operational in 1991. Turkey was the first European nation to issue contactless credit cards in 2006 and the third (behind France and the United Kingdom) to introduce chip and pin features. The World Bank reports most Turkish adults are banked - at an impressive rate of 73%. The remaining unbanked population are largely farmers, traders and are mostly women. Major local banks include Ziraat Bankasi, Türkiye Bankasi, Garanti BBVA, Akbank and YapiKredi. The innovative approach to banking spills over to their view on Fintech. Since the 2010s, local banks have been driven to invest in fintechs - through offering funding, accelerator programs and incubators - rather than compete with them. For example, Turkish Economy Bank (TEB) established TEB Private Angel Investment Platform as one of the first Turkish angel investor networks and İşbank acquired Moka, a payment service provider (PSP) offering mobile payments, in July 2020.
The Digital Türkiye vision coupled with the National Technology Move are local initiatives aimed to support Turkey through its next stage of technological evolution. The government actively supports digital transformation to “not only help Türkiye maintain its financial stability, security and development; but utilize new economic resources, seize opportunities in global finance and technology and increase economic literacy". In December 2022, the finance ministry reported signifcant statistics on the state of payments, fintech and banking on a macro level. Of 629 Fintechs, 250 are in payments, 92 are blockchain-oriented and 89 are banking tech companies. There are currently 74 licensed payment and e-money fintechs. A major industry milestone was achieved in 2019 when local fintech, iyzico was acquired by PayU for $165 million - one of the largest startup exits in the country.
When looking at local payments, the current trends stand out:
Cash is still dominant, recorded as a method of payment for 40% of POS transactions in 2022. This is largely value dependent. For transactions below 20 TL, 91% surveyed were in cash while transactions above 100TL, 60% were in cash. However, the pandemic brought a wave of adoption for contactless payments.
An analysis of card usage indicates there are an estimated 93,8 million credit cards and 66,3 million pre-paid cards in December 2022. Government reports suggest it has the 7th greatest credit card ownership in the world and the leading market in Europe. Credit cards are widely accepted especially in large cities and tourist spots with Visa and Mastercard being the leading card schemes. Domestic bank issued cards account for 60% of all online transactions such as Yapi Kredi, QNB Finansbank, and Akbank. Cash alternatives are not just sitting in card payments alone. Like the rest of the region, mobile payments are a major feature in the payments market. Top mobile wallets are Papara, Fastpay, Pay Cell, Maximum Mobile and Yapi Kredi Mobile. In 2020, CBRT also enabled QR codes to decrease cash reliance for both merchant and person-to-person transactions. Yet, Turkey is distinct when looking at MENA payments as it has highly stringent laws around data processing (much like India and China). Off the back of this, Apple Pay and Google Pay are not yet available locally.
Turning to regulation, payment systems, electronic money institutions and payment institutions are regulated and licensed by CBRT. Over the past few years, there have been developments in the regulatory approach for Turkish payments companies and Fintechs. The payments regulatory body shifted from Banking Regulatory and Supervision Agency (BRSA) to CBRT in 2019 . CBRT has taken strides to enable fintechs to support digital transformation in the financial sector. Echoing the European payments legislation, firms are defined as Payment Institutions (PI) and Electronic Money Institutions (EMI). The Law on Payment and Security Settlement Systems, Payment Services and Electronic Money Institutions No. 6493 governs local payment services. Since April 2022, the capital requirements are as follows:
Payment institutions enabling bill payment intermediary services = TRY 5.5 million
Institutions that offer other payment services = TRY 9 million
Electronic money institutions = TRY 25 million
Secondary legislation, "Regulation on Payment Services, E-Money Issuances and Payment Service Providers" was published by CBRT in December 2021 to define principles and procedures for both PIs and EMIs. The legislation introduced new terms of "prepaid instrument" and "anonymous prepaid instrument". Plus, it detailed the conditions for electronic money. There is currently talks of a regulatory sandbox to be offered to startups in order to test their innovation within a safe environment.
Turkey holds opportunity for payments. With its significant market size, progressive regulator and fintech friendly banking sector, it’s a unique space for newcomers. If your business has Turkey on its roadmap, reach out to us on how Fuse can help you access the region with a single API.
The Republic of Turkey (Turkish; Türkiye Cumhuriyeti) is strategically situated at an intersection between continents. It controls the main access point to the Black Sea. Istanbul, formerly known as Constantinople, lies on the Bosporus Strait at the meeting point of Asia and Europe and is at the center of the country’s economy, culture and history. Istanbul is the largest city in Turkey and the most populated city in Europe with over 15 million residents. The nation’s capital city, Ankara is situated in central Anatolia and the country’s second largest city with 5 million residents. Turkey is surrounded by three major seas: the Mediterranean in the south, the Aegean in the west, and the Black Sea in the north.
The Turkish population is estimated at just over 85 million in 2022 with a median age of 30.6 years. Its cosmopolitan people speak an impressive 70 languages and dialects across the country, with Turkish being the official language and mother tongue for most. Turkey is shown to be a youth-driven nation with 48.3% being below 30 years old. Internet penetration is on the rise, a recent study revealed that Turkey is highly tech-driven with 66 million having internet access and of that, 94% of the users access the internet largely via smartphones. According to 2022 immigration data, the largest expat group is from Russia (25%), followed by Ukraine (8.1%), Iran (6.5%), Afghanistan (5.4%) and Iraq (4.8%). This is contrasted by a steady emigration of Turkish workers to European and other Arab nations over the past few decades. At the turn of the century, there were an estimated 6 million Turks working abroad.
Since the early 20th century, Turkey has focused on industrialisation. While it has a variety of natural resources, it could not rely on their limited reserves to generate wealth compared to the rest of the region. The local textile industry is one of the most significant revenue drivers for the country, emerging as the 5th largest textile exporter globally, and accounting for around 7% of Turkey’s gross domestic product (GDP). In March this year, the United Arab Emirates (UAE) and Turkey signed a trade agreement as the UAE earmarked Turkey for growth and created a $10 billion investment fund. Today, Turkey is the 6th largest non-oil trading partner for the UAE with bilateral trade totalling $18.9 million for 2022, up 40% from the previous year. Data from the Turkish Statistical Institute and the Ministry of Trade indicated exports were up 4.4% and imports increased by 3.4% in March 2023 compared to the same time last year. However, inflation-related challenges have been a part of the landscape intermittently since the late 1970s. In recent years, critics have watched Turkey face significant economic challenges - rising inflation, currency instability and increased debt. It’s reported that the Turkish lira (TL) has devalued against the US Dollar by 50% since the beginning of this year and inflation has reached just over 60%. President Recep Tayyip Erdoğan has been the leader of this democratic nation since 2014. Interestly, the Central Bank of the Republic of Turkey (CBRT) is controlled by the government, unlike most other developed countries. This contributes to the complexities of the Turkish economic outlook as fiscal and monetary policies are intrinsically interlinked.
The Turkish banking industry is a trailblazer when compared to the rest of the region. The first credit card was issued in 1968 and the first point of sale (POS) terminal was operational in 1991. Turkey was the first European nation to issue contactless credit cards in 2006 and the third (behind France and the United Kingdom) to introduce chip and pin features. The World Bank reports most Turkish adults are banked - at an impressive rate of 73%. The remaining unbanked population are largely farmers, traders and are mostly women. Major local banks include Ziraat Bankasi, Türkiye Bankasi, Garanti BBVA, Akbank and YapiKredi. The innovative approach to banking spills over to their view on Fintech. Since the 2010s, local banks have been driven to invest in fintechs - through offering funding, accelerator programs and incubators - rather than compete with them. For example, Turkish Economy Bank (TEB) established TEB Private Angel Investment Platform as one of the first Turkish angel investor networks and İşbank acquired Moka, a payment service provider (PSP) offering mobile payments, in July 2020.
The Digital Türkiye vision coupled with the National Technology Move are local initiatives aimed to support Turkey through its next stage of technological evolution. The government actively supports digital transformation to “not only help Türkiye maintain its financial stability, security and development; but utilize new economic resources, seize opportunities in global finance and technology and increase economic literacy". In December 2022, the finance ministry reported signifcant statistics on the state of payments, fintech and banking on a macro level. Of 629 Fintechs, 250 are in payments, 92 are blockchain-oriented and 89 are banking tech companies. There are currently 74 licensed payment and e-money fintechs. A major industry milestone was achieved in 2019 when local fintech, iyzico was acquired by PayU for $165 million - one of the largest startup exits in the country.
When looking at local payments, the current trends stand out:
Cash is still dominant, recorded as a method of payment for 40% of POS transactions in 2022. This is largely value dependent. For transactions below 20 TL, 91% surveyed were in cash while transactions above 100TL, 60% were in cash. However, the pandemic brought a wave of adoption for contactless payments.
An analysis of card usage indicates there are an estimated 93,8 million credit cards and 66,3 million pre-paid cards in December 2022. Government reports suggest it has the 7th greatest credit card ownership in the world and the leading market in Europe. Credit cards are widely accepted especially in large cities and tourist spots with Visa and Mastercard being the leading card schemes. Domestic bank issued cards account for 60% of all online transactions such as Yapi Kredi, QNB Finansbank, and Akbank. Cash alternatives are not just sitting in card payments alone. Like the rest of the region, mobile payments are a major feature in the payments market. Top mobile wallets are Papara, Fastpay, Pay Cell, Maximum Mobile and Yapi Kredi Mobile. In 2020, CBRT also enabled QR codes to decrease cash reliance for both merchant and person-to-person transactions. Yet, Turkey is distinct when looking at MENA payments as it has highly stringent laws around data processing (much like India and China). Off the back of this, Apple Pay and Google Pay are not yet available locally.
Turning to regulation, payment systems, electronic money institutions and payment institutions are regulated and licensed by CBRT. Over the past few years, there have been developments in the regulatory approach for Turkish payments companies and Fintechs. The payments regulatory body shifted from Banking Regulatory and Supervision Agency (BRSA) to CBRT in 2019 . CBRT has taken strides to enable fintechs to support digital transformation in the financial sector. Echoing the European payments legislation, firms are defined as Payment Institutions (PI) and Electronic Money Institutions (EMI). The Law on Payment and Security Settlement Systems, Payment Services and Electronic Money Institutions No. 6493 governs local payment services. Since April 2022, the capital requirements are as follows:
Payment institutions enabling bill payment intermediary services = TRY 5.5 million
Institutions that offer other payment services = TRY 9 million
Electronic money institutions = TRY 25 million
Secondary legislation, "Regulation on Payment Services, E-Money Issuances and Payment Service Providers" was published by CBRT in December 2021 to define principles and procedures for both PIs and EMIs. The legislation introduced new terms of "prepaid instrument" and "anonymous prepaid instrument". Plus, it detailed the conditions for electronic money. There is currently talks of a regulatory sandbox to be offered to startups in order to test their innovation within a safe environment.
Turkey holds opportunity for payments. With its significant market size, progressive regulator and fintech friendly banking sector, it’s a unique space for newcomers. If your business has Turkey on its roadmap, reach out to us on how Fuse can help you access the region with a single API.
