PYMNTS Intelligence: What Foreign Merchants Need to Know About Doing Business in Türkiye

Türkiye represents an enticing opportunity for foreign merchants, especially as eCommerce quickly gains popularity in the region. Never before has it been easier to gain an entirely new customer base from anywhere in the world, as the need for brick-and-mortar stores and warehouses in the country has been dramatically reduced in favor of online fulfillment.

However, this is not to say it is necessarily smooth sailing in Türkiye. Merchants need a detailed understanding of the Turkish market and economy before dipping their toes in the water. This month, PYMNTS explores the potential benefits and challenges of doing business in Türkiye, including those involving digital payment methods and impending regulation.

Turkish consumers have a wide array of favored payment methods

Paper payments, including cash and checks, are still the most popular payment methods in Türkiye, but their popularity is declining quickly as eCommerce becomes more prevalent. Paper payments made up 61% of total payments volume in 2021 but is expected to drop to 44% by 2026. Electronic payments are seeing the opposite trend, comprising 33% of the total spending in 2021 but projected to hit 41% by 2026.

Real-time payment methods are also growing more commonplace, with their share of payments volume projected to rise from 6.2% in 2021 to 14% by 2026. The majority of this volume consists of large business-to-business (B2B) transactions, however, which comprised 92% of the total spending in 2021.

Merchants looking to break into the Turkish market must also take local and alternative payment methods into account. Domestic digital wallet BKM Express, for example, is responsible for 21% of the noncash payment market. Digital wallets in general are projected to account for 10% of transactions in the country in 2023, making these an important priority for any merchant entering the space. Merchants should also be aware of potential hurdles before attempting an eCommerce play — including regulations.

Impending regulations could hinder merchants’ entry into the Turkish market

Türkiye’s regulatory environment is changing quickly as it aspires to join the European Union in the coming years. One of the most significant changes is in its domestic instant payments system FAST, which the country’s central bank is rapidly innovating to follow the same standards as the rest of the EU. Merchants will need to ensure their payment systems are compatible with FAST at each stage of the upgrade process, or they risk payment failure at checkout.

Other complications include high levels of fraud, the high cost of cross-border payments and low approval rates for foreign merchants. Sellers looking to enter the Turkish market would be well-served by outsourcing payments compatibility to third-party specialists — or risk having their launches tainted by excessive expenses and delays in making their systems appealing to local customers.