Electronic money

Scope

Article 3/1-ç of Law No. 6493 defines electronic money. It is prohibited for persons other than banks, PTT and electronic money institutions that have obtained a permit from the Central Bank of the Republic of Türkiye (Türkiye Cumhuriyet Merkez Bankası) to issue electronic money (Art. 18/1-2). Prepaid instruments that can be used only within the issuer’s own network of stores or for a specific group of goods or services are, as a rule, outside the scope of the Law; the Central Bank may bring such transactions within the scope once they reach a certain size (Art. 18/5).

The issuing institution issues electronic money equal to the funds it receives and converts the funds into electronic money without delay (Art. 20). An electronic money institution keeps the funds it collects in a separate account opened at banks, cannot grant credit and cannot provide interest or any other benefit on electronic money depending on the period for which it is held; these funds are not regarded as deposits or participation funds (katılım fonu) (Art. 20/3, 20/4, 20/5, 20/7).

Practical significance

Prepaid cards, electronic money accounts and some mobile payment applications are based on electronic money. For the user, the institution’s Central Bank permit and the conditions relating to the redemption of electronic money are important; the rules on issuance and redemption are determined by a Central Bank regulation (Art. 18/6). Companies that use gift cards or closed-loop payment instruments should assess whether the instrument falls within the limited network exception.

Commonly confused concepts

Electronic money is not a crypto-asset: the Central Bank’s Regulation on Not Using Crypto Assets in Payments defines a crypto-asset as an asset that is not characterized as electronic money and prohibits its use in the issuance of electronic money. Electronic money is also different from a bank deposit; the funds collected in exchange for it are not regarded as deposits and no interest linked to the holding period can be paid. A digital wallet, on the other hand, is not electronic money itself but an instrument that enables the use of payment accounts or payment instruments.