Payment is the transfer of value amid two parties. It may be used for a variety of purposes, including purchasing goods & services, to settle a legal obligation or to transfer funds between parties/ locations. It encompasses a wide range of activities such as paying with cash, writing a cheque, writing money overseas and paying for inventory via EDI.
According to study, “Payments Landscape in Turkey: Opportunities and Risks to 2022” some of the major companies that are currently working in the payments landscape in Turkey are Ziraat Bank, VakifBank, DenizBank, YapiKredi, Isbank, Garanti Bank, Akbank, QNB Finansbank, Visa, MasterCard, American Express.
Some payment systems are involved paper-based system, real-time gross settlement, real-time net settlement system and cards. Paper-based systems involve checks or drafts. Real-time net settlement or high-value payments, commonly called wire transfers. Real-time net settlement systems are processed in batches.
Some key drivers of payment industry are involved real-time payments, distributed ledger technology/block-chain, expansion of payments to non-physical interfaces and unified platform etc. Some technologies disrupting the payments landscape: social payments, biometrics, machine learning, and pay-by-installment.
Regulation has a major impact on business models: it is developed in different layers: sector, channel, and product. Some main points of the regulations are reduced customer liability, limited network exclusion, greater access to bank accounts & account information, ban on surcharges and reporting etc. Security involves objective elements and subjective elements: it refers to any system designed to ensure that contractors and sub-contractors are paid even in case of dispute.
Some challenges for payment industry are involved new consumer behavior & needs, technology changes, regulatory pressure, and industry trends. New consumer behavior & needs are involved in cross-channel view, more payments, the expectation for frictionless and demand for more security. Technology changes are involved mobile, wallets, platform/architecture renewal, biometrics, and cyber security. Regulatory includes compliance, data privacy, open banking, and resiliency. Additionally, industry trends include cost reduction pressure, new trade corridors and instant payments.
Turkey’s domestic payment card scheme introduced to increase competition in the Turkish payment card market. Currently, Troy (card payment system) is partnered with 26 banks to offer Troy-branded debit and credit cards in the country. Troy’s processing fee is lower than its competitors, making it more viable for small retailers to accept cards, boosting overall card acceptance in the process.
The Turkish government increased the maximum monthly credit card interest rate limit to curb rising consumer credit card debt. In 2017, the monthly maximum contractual interest rate for the Turkish lira was 1.84% and the maximum monthly overdue interest rate was 2.34%. In 2018, the value of the monthly maximum contractual interest rate is 2.02% and the maximum monthly overdue interest rate is 2.52%.
In June 2018, UnionPay International signed an agreement with YapiKredi to help Chinese tourists make electronic payments. As per the agreement, Chinese tourists visiting Turkey can use their UnionPay cards to make payments at 350,000 in-store merchants and 2,000 online YapiKredi merchants. They can also withdraw funds at the bank’s 4,000 ATMs. Approximately 400,000 Chinese tourists are expected to visit Turkey. This collaboration will help YapiKredi attract more users and thus boost the overall Turkish payment card market.
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Ankur Gupta, Head Marketing & Communications