Blog: Draft Regulation Amending The Regulation On Debit Cards And Credit Cards Is Published – Financial Services – Turkey – Mondaq

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  1. INTRODUCTION

On October 28, 2022, the Banking Regulation and Supervision
Agency (“BRSA“) published the Draft
Regulation Amending the Regulation on Debit Cards and Credit Cards
(“Draft Amendment“). The Draft Amendment
proposes certain amendments to the Regulation on Debit Cards and
Credit Cards (“Regulation“), the details
of which are summarized below.

In this context, the Draft Amendment does not allow the card
schemes of card system institutions that are not authorized to
operate in Türkiye to be included in debit or credit cards to
be issued in Türkiye. The card schemes of these institutions
can only be defined in the said cards provided that the card scheme
of a card system institution that has obtained an operating license
in Türkiye is also defined in the said cards. Within this
framework, various obligations have been imposed on the card
issuing institutions and acquirers, which will be explained
below.

The aforementioned obligations, which are closely related to the
activities of those headquartered abroad and opening a
representative office or branch in Türkiye to provide debit or
credit cards to domestic customers, card system institutions that
have not obtained an operating license in Türkiye, and the
activities of acquirers located abroad towards Turkish residents,
are briefly summarized below.

  1. CARD SCHEME

With the Draft Amendment, the concept of a “card
scheme”, which was not previously regulated in the
aforementioned legislation, has been included within the scope of
the Regulation, and accordingly, the following provision has been
added to Article 4 of the Regulation which defines “Card
Scheme” as “body of rules, practices, guidelines and
standards that enable card payments, also covering the
organizational structure, management and executive bodies
responsible for the operation of a card system operator independent
from the infrastructure and payment systems of such card system
operator”.

  1. NEW OBLIGATIONS FOR CARD ISSUING
    INSTITUTIONS

1) Considering the European Union Regulation
No. 2015/751 and international practices on the use of card schemes
of two or more card issuing institutions, it is regulated that card
issuing institutions may not issue cards to be used domestically by
their customers with the card scheme of a card issuing institution
that is not authorized to operate in Türkiye defined on its
own. Card issuing institutions will be able to link the cards they
issue to the card scheme of a card system operator that does not
have an operating license in Türkiye only if such cards are
also linked to the card scheme of a card system operator that has
an operating license in Türkiye. In addition, by adding a
provision to Article 21 of the Regulation with the Draft Amendment,
it has been clarified what is meant by the domestic use of a debit
or credit card; and it has been regulated that the use of a debit
or credit card at the POS of an institution authorized to operate
in Türkiye as an acquirer will be accepted as the domestic use
of the card.

2) In case a card scheme brand is included on
the card, it is obligatory to include all card scheme brands that
the card is defined with. On the other hand, card issuing
institutions are obliged to provide the following information
during the card application;

  • Providing the customer with the right to prefer which card
    scheme of the card system institution will be used to issue the
    card, complying with this choice, and informing the customer
    clearly and objectively about the functions, security features,
    costs and customer rights of the card scheme options, including the
    domestic and international use of the card,
  • In the implementation of the aforementioned preference right,
    not force customers to prefer more than one card scheme brand at
    the same time and to provide the customer with the opportunity to
    determine which scheme will be applied to the card in priority if
    the customer prefers to use more than one card scheme at the same
    time before the card allocation; and to fulfill this request within
    fifteen days at the latest if the customer requests to change the
    priority card

3) If acquirers located abroad carry out
activities for Turkish residents, card issuing institutions may
approve transaction confirmation requests from POSs allocated to
these acquirers, provided that these requests come only from the
POS of an institution that is authorized to operate as an acquirer
in Türkiye.

If the Draft Amendment enters into force in its current form,
the new regulations that card issuing institutions will be obliged
to comply with are as above. A transitional provision is envisaged
for the cards issued by card issuing institutions before the date
of entry into force of the said amendments, and it is regulated
that these cards will be exempt from the obligations and
limitations listed in the first and second articles above, whereas
in case the said cards are renewed after the entry into force of
the said amendments, this exemption will end, and in this case, the
renewed cards will also be subject to the said obligations and
limitations.

Therefore, if cards issued by card issuing institutions before
the date of entry into force of the Draft Amendment are renewed
after the entry into force of the amendments, it will not be
possible to issue cards defined to the card scheme of a card system
institution that does not have a license to operate in Türkiye
without also including the card scheme of a card system institution
that has a license to operate in Türkiye. Card issuing
institutions will also be required to comply with all other
obligations outlined in points one and two above, such as the
issues to be taken into account when including the card scheme
brand and offering customers the right to prefer priority of card
schemes.

When the Draft Amendment is evaluated as a whole, particularly
the obligations imposed on card issuing institutions, it states
that card system institutions that have not obtained an operating
license in Türkiye in terms of debit or credit cards to be
used in Türkiye after it enters into force; their card schemes
can’t be included in the said cards alone unless they have
obtained an operating license. In addition, considering the fact
that the customer has the right to determine and change the primary
card scheme, it seems that the customer will either have to choose
to have its card scheme included in the cards together with the
card scheme of a card system institution that has an operating
license in Türkiye or instead obtains an operating license as
a card system institution in Türkiye. From this perspective,
it can be said that the Draft Amendment encourages obtaining an
operating license as a card system organization in
Türkiye.

  1. ACTIVITIES CARRIED OUT BY ACQUIRERS RESIDING ABROAD FOR
    PERSONS RESIDING IN TÜRKIYE

As mentioned above, as per the new provisions planned to be
added to Article 21 of the Regulation titled “Card issuance
and related obligations”, if acquirers located abroad are
engaged in activities directed to residents in Türkiye, card
issuing institutions may only approve transaction confirmation
requests from POS allocated to these acquirers located abroad,
provided that they are made through the POS of an institution that
has a license to operate as an acquirer in Türkiye. In
addition, the Draft Amendment also specifies the cases that will be
considered as “activities carried out by acquirers
residing abroad for persons residing in Türkiye
“.
Accordingly, if any of the aforementioned businesses open a place
of business in Türkiye, establish a website in Turkish, and
engage in promotional and marketing activities directly and/or
through Turkish residents concerning the goods and services
offered, the activities will be deemed to be directed to Turkish
residents. In addition, the Draft Amendment authorizes the Banking
Regulation and Supervision Agency to determine additional criteria
for determining that the activities in question are directed to
Turkish residents and to determine the procedures and principles
regarding the implementation of the said provision.

  1. OBLIGATIONS IMPOSED ON INSTITUTIONS CONCLUDING ACQUIRER
    AGREEMENTS

If the Draft Amendment enters into force in its current form,
the institutions concluding acquirer agreements are obliged to
ensure that the card schemes of all card system institutions that
have obtained permission to operate in Türkiye are defined on
the POSs to be used by their acquirers. If more than one card
scheme of more than one card system organization is defined on the
accepted card and all of these card schemes are defined on the POS,
the cardholder will automatically be allowed to use the preferred
priority card scheme unless the cardholder indicates otherwise. On
the other hand, if the cardholder prefers to use a different card
scheme, the card issuing institution shall be obliged to use the
other card schemes defined on the card in accordance with this
preference.

  1. CONCLUSION

The provisions of the Draft Amendment of the BRSA, which are
explained in detail above and will enter into force 3 months after
the date of publication, will encourage card system institutions to
obtain an operating license. In addition, card system institutions
that operate/will operate in Türkiye by obtaining an operating
license will be widespread and thus service diversity will be
ensured. It is aimed to develop the card payments ecosystem.
Comments on the Draft Amendment can be sent via e-mail to duzenleme@bddk.org.tr.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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