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In Turkey, more and more payment options have reduced consumers’ reliance on cash.
In fact, similar to other countries, Turkey’s transition away from cash was significantly accelerated by the pandemic, a change that went hand-in-hand with the growth of the country’s FinTech ecosystem.
According to Turkish FinTech veteran Soner Cank, also the founder of FinTech Istanbul, the use of local contactless payments has increased in the 15 months since the start of the pandemic as much as in the previous 15 years.
What’s more, the move towards a cashless society is not just driven by cards. International money transfers and digital wallets have also been instrumental in modernizing Turkey’s payment system.
Connected: IDEKS Biometrika represents payment cards in Turkey
Turkish consumers “don’t want to touch cash and don’t want to pay with cash anymore,” Canko said in an interview with PIMNTS, adding that “everyone prefers to pay by debit or credit card, [while] all digital wallets and other technologies also support this tendency.”
A single marketplace of digital wallets
Acknowledging that a similar pattern of digital transformation can be seen across the Middle East and North Africa (MENA) region, Canko nevertheless pointed to some idiosyncrasies of the Turkish market. He said that alongside China and India, Turkey has some of the strictest rules governing how tech firms process citizens’ data.
And since companies can’t store financial records outside the country, this has precluded cloud-based business models from investing in localizing their infrastructure.
As a result, some of the most popular mobile wallets, including Apple Pay and Google Wallet, are not available in Turkey.
But far from holding back Turkey’s PayTech ecosystem, the absence of international players has left more room for local providers to develop, Canko said, pointing to the many alternative wallets Turks have to choose from, among those offered by banks and FinTech payment service providers.
He warned, however, that the proliferation of digital payment solutions risks confusing consumers.
“The current competition, from a player’s point of view, creates confusion in the eyes of the consumer.” So everyone is focused on their market share, but no one is [taking into account the confused state of the consumer]”, stated Canko.
Moreover, he noted that this problem is not unique to Turkey and predicted that different wallet providers will have to work together to solve the problem.
Pointing to the recently approved merger of Vipps and Mobile Pay, the two largest mobile wallets in the Nordic region, by the EU Commission, Canko said he expects similar consolidation to become a growing trend in other markets.
But he made a distinction between brand consolidation and corporate monopoly. “I do not [mean] one player, i [mean] one brand in terms of digital wallets is necessary for each market,” he stressed.
Expanding on the point, Canko added that the goal is to create a consolidated brand that’s easy to use, rather than having different individual wallets work on their own: “If we can create an umbrella brand that is ‘pay with wallet,’ then when I select ‘pay with wallet,’ I can to make a choice based on my wishes.”
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