Bus travel in Turkey: soon payable by SMS message thanks to a fintech for the unbanked © Muhammed Enes Yildirim/Getty Images

When bus passengers in the Turkish city of Kahramanmaras wanted to replenish their travel cards remotely in years past, they had only one option: use a credit card to top up online.

Those without a bank account had no alternative until a Turkish fintech company called Payguru stepped into the breach. Since 2018, transport users have been able to send a text message to refill their cards, with the cost either deducted from their pre-paid phone credit or added to their monthly bill.

“If you need to take a bus you just send an SMS,” says Isik Uman, Payguru chief executive. “It’s a real payment method that makes it easier for people to top up their cards.”

About 65,000 people in the southeastern city of 650,000 people have used the SMS payment method in the past year. The same model is due to be rolled out soon in Ankara, the Turkish capital, with other cities to follow.

Payguru is seeking to fill a void in a country with sophisticated online banking products and a burgeoning fintech sector — albeit one that has far fewer options for around 19m people who are “unbanked”.

While Turkey is “very progressive in terms of the banking infrastructure”, according to Mr Uman, large gaps remain on the consumer side. “Still a major segment is unbanked,” he says.

Isik Uman, Payguru chief executive

“For years we’ve been planning to use the billing capability of operators in order to bill customers for purchases they made either in the physical world or online . . . Step by step we implemented an alternative way to collect money.”

Today, Payguru works with 1,300 merchants across Turkey — from Burger King to online gaming providers — and processes 275,000 payment requests a day.

The concept became even more relevant as the pandemic meant millions of people in Turkey were confined to their homes during lockdown.

“In April and May we saw a huge increase in digital services like streaming [and] gaming,” said Mr Uman. “I was expecting this to come down when lockdown was eased in June. But even in July, August and September we broke records. It’s a major shift in the behaviour of consumers in making payments.”

Only 54 per cent of Turkey’s adult female population have their own financial account © Altan Gocher/Getty Images

About 30 per cent of the Turkish population aged 15 and over have no bank account, according to a 2017 report by the World Bank, leaving them financially marginalised and reliant on cash payments.

Many of those millions of unbanked people are from lower socio-economic backgrounds, working in low-paid, informal jobs or out of the labour force.

Women, in particular, are more likely to be unbanked. Only 54 per cent of Turkey’s adult female population have their own financial account, compared to 83 per cent of adult men.

That picture is part of a broader global phenomenon, particularly in developing economies. The World Bank, which has made promoting financial inclusion one of its key priorities, says that 1.7bn adults across the world have no account with a financial institution or through a mobile money provider. Almost half of them live in just seven nations: Bangladesh, China, India, Indonesia, Mexico, Nigeria, and Pakistan.

Burhan Eliacik, president of the Turkish Payment and Electronic Money Institutions Association (Todeb), says that Turkey’s authorities grasped the importance of reaching the country’s unbanked population.

They understood, he says, that supporting the fintech industry would be “good for the economy, the country, social wealth and . . . for low income segments of the population like housewives, students [and] irregular earners”.

Over the past seven years, they have made regulatory changes that have enabled innovation in the alternative payments sector to flourish.
According to Todeb, there are now 54 licensed e-money institutions or payment service providers in Turkey. “It’s almost around the number of banks,” said Mr Eliacik. “We doubled the number of payment service providers.”

The main obstacle faced by those offering direct carrier billing, as the SMS payment method used by Payguru is known, is that mobile companies still take a relatively high level of commission. “It’s a burden for etailers or retailers to accept mobile payments,” says Mr Uman. “We are trying to negotiate with operators so that more and more merchants start using it as an alternative payment method.”

Still, his company’s rapid growth has attracted international interest. In June, Payguru was bought for an undisclosed sum by TPAY, a Dubai-based mobile payments platform that operates in 24 countries across Africa and the Middle East.

Sahar Salama, TPAY chief executive

Sahar Salama, TPAY founder and chief executive, says she is excited by the prospect of expanding into a large new market at a time when alternative digital payments are in the spotlight.

Her company has seen a surge in interest from merchants as consumers have changed their behaviour in response to the pandemic. “More and more service providers and merchants do want to convert to online payment,” she says. “And [they] want to search for alternative payments in a region that has huge appetite.”

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