In Turkey, the proliferation of payment options has 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 has gone hand in hand with the growth of the country’s FinTech ecosystem.
According to Turkish FinTech veteran Soner Canko, also the founding partner at FinTech Istanbul, local contactless payments usage grew as much in 15 months from the onset of the pandemic as they did in the previous 15 years.
What’s more, the shift toward a cashless society hasn’t been driven by cards alone. International money transfers and digital wallets have also been instrumental in the modernization of Turkey’s payment system.
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Turkish consumers “don’t want to touch cash and don’t want to pay by cash anymore,” Canko told PYMNTS in an interview, adding that “everybody prefers either debit or credit card payments, [while] all the digital wallets and other technologies also support this tendency.”
A Unique Digital Wallet Market
Acknowledging that a similar pattern of digital transformation can be seen across the Middle East and North Africa (MENA) region, Canko nonetheless pointed to some idiosyncrasies of the Turkish market. He said that alongside China and India, Turkey has some of the strictest rules governing how technology firms process citizens’ data.
And because companies can’t store financial records outside of the country, this has foreclosed the possibility of cloud-based business models from investing in localizing their infrastructure.
As a result, some of the most well-known mobile wallets, including Apple Pay and Google Wallet, aren’t available in Turkey.
But far from holding back the Turkish PayTech ecosystem, the absence of international players has left more room for local providers to grow, Canko said, pointing to the many alternative wallets Turks have to choose from, between 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 the players’ point of view, creates confusion in the consumer’s eyes. So, everybody is focused on their market share, but nobody is [taking into account the confused state of the consumer],” Canko stated.
What’s more, he observed that this problem is not unique to Turkey and predicted that different wallet providers will have to work together to solve the issue.
Pointing to the recently approved merger of Vipps and Mobile Pay, two of the biggest mobile wallets in the Nordic region, by the EU Commission, Canko said that he expects similar consolidations to become a growing trend in other markets.
But he made a distinction between brand consolidation and corporate monopoly. “I don’t [mean] one player, I [mean] one brand in terms of digital wallets is necessary for each and every market,” he emphasized.
Expanding on the point, Canko added that the goal is to create a consolidated brand that is easy to use rather than having different individual wallets all operating on their own: “If we can create an umbrella brand which is ‘pay by wallet,’ then once I choose ‘pay by wallet,’ I can make a selection based on my preference.”
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