Revolutionary Legislative Move by BRSA Will Affect Card Schemes

Recent developments

The Banking Regulatory and Supervisory Authority (the “ BRSA “) published the Draft Regulation Amending the Regulation on Debit Cards and Credit Cards (the “ Draft Amendment “) on October 28, 2022. Comments on the Draft Amendment can be submitted to [email protected] via email.

What does the Draft Amendment say?

The Draft Amendment defines the card scheme and regulates the Turkish operations of foreign card schemes.

Card Scheme

The Draft Amendment defines a 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.”

New Obligations

The Draft Amendment provides for a new regime in respect of the debit and credit cards issued:

• Card issuers cannot issue cards to be used in Türkiye in a manner that these cards are linked solely to the card scheme of a card system operator that does not have an operating license in Türkiye.
• Card issuers 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.
• If a card issuer is willing to include a card scheme brand on the card, the card issuer will be required to include all the card scheme brands that such card is linked to.
• In card applications, the card issuers will inform the clients objectively and clearly on the domestic and international use, features, security and charges of all card scheme options; they will allow the clients to choose the card system operator, and they will be obliged to comply with the clients’ choice.
• The card issuers will not require the clients to choose more than one card scheme option, and if a client prefers to proceed with more than one card scheme, they will enable the client to determine which card scheme will be linked to the card as the primary card scheme. If the client requests to change this primary card scheme, the card issuer will make the change within 15 days at the latest.
• The use of the card at a Point of Sale (“ POS “) of a card issuer holding an operating license in Türkiye will be deemed use of such card in Türkiye.
• The cards issued prior to the effective date of the Draft Amendment will be exempt from the above obligations and restrictions. If these cards are renewed after the effective date, they will be subject to these obligations and restrictions.

The Draft Amendment also includes new obligations for the card issuers:

• Card issuers will be required to link the card schemes of all card system operators that hold an operating license in Turkey to their POS.
• When the card is linked to multiple card schemes that are also linked to the POS, the card issuer will automatically use the client’s primary card scheme unless the client specifies otherwise. If the client specifies another card scheme, they will use the client’s preferred card scheme. In other words, the client will be able to change the card scheme on a transaction basis.

For non-resident businesses’ activities addressed to Turkish residents, the card issuer will be able to approve transaction requests from the POS allocated to these non-resident businesses only if the requests are received from the POS of a card issuer holding an operating license in Türkiye.

Non-resident businesses’ activities will be deemed to be addressed to Turkish residents in case of establishing a place of business in Türkiye, running a website in Turkish or directly or indirectly promoting or marketing activities toward Turkish residents in Türkiye.

Conclusion

With the Draft Amendment, the BRSA is aiming to incentivize the licensing foreign card system operators having card schemes in Türkiye and expand the local card payments ecosystem.