Opinions

• Murat Yalçıntaş - Chairman of Istanbul Chamber of Commerce
  WE PROMPT YOU TO USE CARD
  Credit card is an important instrument not only for the consumers but also for everyone. Being aware of this importance, İstanbul Chamber of Commerce prompt you to use card. On this subject, some works have been performed before both the banks and the government. Murat Yalçıntaş, İstanbul Chamber of Commerce President, states that Turkey is among the fastest growing countries by the ratio of credit card usage and says; “We prompt you to use credit card. Lots of our members will began to use credit card directly soon.”
  In this direction, there are lots of works made by İstanbul Chamber of Commerce under the leadership of Yalçıntaş. For example, İstanbul Chamber of Commerce prompt their banks to increase their promotions and diminishes their card interest. The campaign “The day is today in shopping” was the attempt of İstanbul Chamber of Commerce. Campaign ensured to increase shopping excessively by the ratio of 30 percent and to enliven it in İstanbul.
  We talk with Murat Yalçıntaş, Istanbul Chamber of Commerce President, about the advantages of credit cards, its importance in commerce, and what kind of works he has been carrying out on the usage of credit cards.
  What is the contribution of credit cards to the economy? What are your observations on this subject as Istanbul Chamber of Commerce President?
  The most important positive aspect of credit card usage from our perspective, i.e. from the perspective of Istanbul Chamber of Commerce is that it prompts organization, public or the consumers to remain in the registry. Accordingly, the increase in tax incomes of the state. In this context, credit cards are extremely important instruments. The usage of credit cards provides savings by the ratio of approximately one third both in workmanship and security besides raw materials compared to the cash. Therefore, this saving should not also be ignored.
  According to Interbank Card Center data, there are approximately 60 million bank cards and 43 million credit cards in our country in 2008. The number of bank credit card before 5 years was 40 million; the number of the credit card was 20 million. Therefore, we can say that the usage of bank cards and credit cards in Turkey have become widespread and adopted very quickly..
  We are third as the bank card number and forth as the credit card number in Europe. We are second in POS machines with 1,6 million POS machines. There is such a situation in POS machines that the banks could not pass to POS machine usage. This should change. Therefore, I observe its effects on economy like this.
  You mentioned that the credit card usage prevents informality. What kinds of works have you performed and are you performing on this subject as Istanbul Chamber of Commerce?
  Credit card has lots of advantages. I have mentioned its macro advantage. This was prompting of formalization.
  Besides, it has some advantages both for the consumers and the companies. One of them, it reduces the risk of carrying cash. Cash is always risk. There is no such thing in credit card. Conscious consumers have the ability to control their spending. So, when you receive your credit card statement at the end of the month, you have the possibility to see how much you spend on what, on clothes and on other needs and to plan this. There is no possibility on cash.
  Yet in the same way, it also provides a particular funding opportunity to people in this crisis environment because perhaps there is no cash with you at that time, but when you use credit card, it provides an average maturity of 15 days. You can do this for your individual spending, so, you can even go to the cinema forward almost at an angle.
  More importantly, it is possible to pay all of the bills such as natural gas, electricity, telephone. This is a very attractive possibility of payment for consumers. Besides, there are promotions made by all the banks. I regard this extremely positive. In some of them you are entering in airline miles, cash, or sweepstakes, but most importantly, they can split into installments. This is also another factor that encourages consumers to spend, and makes spending easy.
  What can it be made to be used more of the credit cards?
  We made a research prepared as Istanbul Chamber of Commerce with the subject of “The usage of credit card on consumer habits, place, time and brand choices of the shopping”. It was published in 2007. It was greeted very positively.
  Again in the same way, there is chip&PIN application that has begun in recent years. This was an extremely important application for the security of the credit cards since the more the consumer feel safe; the more comfortable they use it.
  Do you think that the card diversity is required to be increased in Turkey? What advantages will the increase in card diversity provide at macro and micro level?
  The ideal one is to do all the shopping by using credit card instead of cash. You can see when you go to Europe. A further version of chip&PIN application is that the purchase process takes place automatically as soon as you touch the credit card. This is a method used for very low payments. This will be settled in Turkey in time. In 2003, the total card usage that was 39,4 billion TL increased to 185 billion TL in Turkey in 2008. Credit cards are used in Turkey at most in festivals with 15,6 percent, in holidays with 11,6 percent, on special days such as Christmas or Valentine’s day with 11,4 percent. Therefore, when the consumers go shopping, they prefer credit cards consciously. Of course when you do shopping via internet or television, you also use credit cards.
  As in all over the world, especially in Turkey, the increase in shopping via internet increased the usage of credit cards. In 2003, the usage of credit card was 3,1 billion TL, it has increased to 15,7 billion TL. In this context, the widespread of internet and e-commerce has an extremely effect on credit cards.
  What is the share of credit card use in trade? What kind of programs do you prepare in order to enhance this?
  It is impossible to collect data about how much credit card is used in total trade. TCSCR (Trade Council of Shopping Centers& Retailers) made a study among its members. It has researched that the people especially coming to AVMs make how much of their shopping with their credit card, how much with cash.
  According to their data, 99 percent of shopping in the enterprises under TCSCR is made with a credit card. I need to note that the use of credit card increases to the extent that you go to organized retail, it falls as long as you go to small retailers. When you go to the grocery store people have still been shopping with cash. But when you go to the stores such as Beymen or Zara, you do shopping with credit card.
  HOW CAN THE USE OF CREDIT CARD BE INCREASED?
  “SHOPPING HAS INCREASED 30 PERCENT”
  As ICC, we have made the campaign “The day is today in shopping” in order to enliven the domestic demand. During the campaign, although the shopping rate in Istanbul varies due to the sectors, it increased by 30 percent on average. The biggest reason of the crisis is actually psychological. Therefore, keeping the expectations of consumers positive and also the companies’ keeping their expectations positive is very important.
  “CREDIT GUARANTEE FUND SHOULD BE CREATED”
  We have a few suggestions that we presented to the government in this regard. Some of them are granting state guarantee to the consumers in the relationship between banks, the creation of a credit guarantee fund for loans and especially falling of the taxes in lower tax brackets. Today, one of the major problems is that a man gives checks but he cannot pay them. .
  “OUR MEMBERS HAVE BEEN RECEIVING CHEAP LOANS”
  A man has been writing to the bank: “It is disposed without my consent”… This time the person holding the check is regarded falls to the state of a thief. As ICC, we have made agreement with 10 banks and 1 financial institution in order that our members who have credit difficulty can provide credit more comfortably. ICC members can use those cheap credits. Again, in the same way, we have our own members to use credit about 12 percent below of market rates from our own resources through Halk Bank.
  “HOW DOES THE USAGE INCREASE?”
  Today, the interest in market is 25 to 26 percent; ICC have them to use credit at 14 percent including all costs. Default interest rates are still very high. But I believe that the default interests in credit cards will fall together with falling interests. So, more of our members will began to use credit card directly.
  It is said that the expenditures made by the consumers above their income and the payment shortage of them afterwards cause a debt of 4 billion TL on the credit cards today. What do you think about how this rate will affect commerce? Do you have resolution suggestions on this matter?
  A figure does not tell you anything. You should look at that figure by comparing it with other figures. According to the results of 2007, the proportion of people who use credit cards without trouble in Turkey is 97 percent. So 97 percent of them have been paying their money timely. 97 percent of them do not have any trouble with the bank. The figure you mention is equivalent to 3 percent. In the same way, when we look at the income level of credit card users, we can see that 79 percent of them have a regular income. There are two important parameters here. The first important parameter is that the banks need to be careful while giving credit cards. They were as the phase is so much excited at one stage. They understand the importance of it in time. The most important thing is consumers. Consumers should make their own spending as planned and programmed. While banks also are giving credit card, they must determine the limit of the credit card due to the ability to pay. Of course default interests are also important.
  
• Ersin Özince - İş Bank CEO and President of the Association of Banks
  THE MOST IMPORTANT FACTOR AFFECTING REGISTERED ECONOMY POSITIVELY ID CREDIT CARDS
  DEPOSIT MONEY TOOL
  Credit cards are the biggest tool in deposit money, i.e. on the non-cash matter in Turkey’s economy today. In particular, the economists and the ones governing country’s trade and economy are required to realize this very well. Credit cards have become negotiable instruments, i.e. bonds, checks and promissory notes; above all, they have become a deposit money tool. This condition has also very positive impact on the formal economy. Even we can say that perhaps the most important factor affecting positively the formal economy is credit cards.
  CONSCIOUSNESS HAS EVOLVED SO MUCH
  A very serious awareness about credit cards has evolved. Now our citizens and our businesses know the rules of using credit cards s very well. To the question that “in this period, should the consumers use credit cards?” my answer is absolutely yes. We can say that this is a good term for consumers’ credit card use. This is necessary for economic recovery. I think everyone should use credit card as much as they do not exceed their monthly income and payments and not to fall in difficult situation in payments.
  ADVANTAGEOUS FOR CONSUMERS
  In addition, there are other advantages of credit cards for consumers. The most important advantage is generating installments. They can postpone their spending by dividing it into the month. They can provide cash flow through this installment advantage. Besides installment, they have some opportunities of earning points and making use of various promotions. As a result, we can say that credit cards have great advantages for the consumers.
  Even in daily payments, for recording the transactions and the economy, credit cards should be used.
  By recording the economy, credit cards contribute to the growth of the state and the sector. It is possible to see this positive impact, particularly in the retail sector.
  
• Abdurrahman Yıldırım - Journalist and Economics Writer
  USING CREDIT CARD IS PATRIOTISM
  Journalist and writer Abdurrahman Yıldırım has the opinion of being patriotism of using credit cards during this period. However, in this process it is also remarkable that there are some risks. Yıldırım says “Consumers may lose their job due to the crisis in this process. For those who will not lose their job or will not have difficulty in repayment, spending with credit card is patriotism and a contribution to the economy”.
  The global crisis is also affecting the Turkish economy but there are not any noticeable declines in credit card spending. Journalist and writer Abdurrahman Yıldırım states that the expenditures made by credit card in Turkey before crisis is becoming widespread day by day and now it transformed into a horizontal course. He states that at first, Turkish consumer continued to consume because they comprehend the crisis as the crisis of the world crisis and he says, “Consumption may continue up to a point without interruption because with the growth experienced in Turkey in the last 5-6 years, revenue growth has been experienced and some people have increased their wealth. Therefore, consumption may remain alive. But if the crisis lasts longer, big declines may be seen.”
  Abdurrahman Yıldırım expresses his thoughts about the contribution of card payment systems to the economy of the country as:
  In terms of macro-economy, in terms of banks and government in this period, spending with credit card is a good and necessary option. If you say why you say, credit card splits the payments into installments and spreads to long-term. If the cash in the hands of consumers, they can make their spending with credit card and they can splits it into installments. According to consumers everything that can be split into installments are cheap. But it can also create a decisive effect. Shopping with credit card normally inflates the spending. But on the other hand, it is essential since it will strengthen the economy at the point where economy stops.
  PAYMENT WITH CARD REDUCES RISKS
  However, in this process it must not be forgotten that there are some risks. In this process the consumers may lose their job because of the crisis. For those who will not lose their job or will not have difficulty in repayment, spending with credit card is patriotism and a contribution to the economy. But for the people who have problems in paying back, it is a serious economic danger. In order to provide reimbursement, the spending to be made by credit card facilitates the work of the economy now. It gives life to the companies. Before the crisis, credit card usage was on the rise with the population. Now there is a transformation into a horizontal course. There is a brake press, but we can see it clearer in the coming months. At first, consumers continued to consume because they comprehend the crisis as the crisis of the world crisis. The consumption may not halt drastically it may remain partly alive since in last 5-6 years, the people may have accumulated wealth due to growth and revenue growth. But if the crisis continues and unemployment increases, it may be seen big declines in spending.
  In card payment systems, being everything is under recording and to know how much and on which things it is spent is very important. These expenditures can be subject to all kinds of classification. You can spread this spending in term. Consumers do not have to allocate all of their monthly income for a single property. They can continue to pay their spending with the next month’s income. Credit card allows people to do planning on spending. It allows companies and sellers for making cash flow planning. Companies are also able to be more relaxed because there is a bank between them. They know that consumers will pay their debt through the bank.
  Besides facilitating the sales of a property, credit card also eliminates the risk of check- deed. Therefore, this is a system for extremely benefit of also the sellers. It eliminates the problem of repayment, i.e. collection.
  Besides, the use of credit card reduces the habit of carrying cash of the customers, so, the amount of money in circulation decreases. The consumers are protected from some risks since they do not carry cash. In some crime incidents such as robber or extortion, there is a decrease.
  
• Mustafa Boydak - Boydak Holding Vice Chairman of the Board of Directors
  ANATOLIAN TIGERS HAVE A GREAT IMPACT
  “In Anatolia, credit card usage has come from the levels of 10 percent to 50 percent” says Mustafa Boydak, Kayseri Chamber of Commerce Chairman and he states that half of the sales are performed by credit card has reached to 100 percent according to Boydak, the contribution of credit card usage to turnover is around 25 percent compared with the period without credit card. But, credit card penetration in Anatolia has not been provided yet.
  Mustafa Boydak, Boydak Holding Executive Board President and Kayseri Chamber of Commerce President, the boss of seven brands in which there are İstikbal, Bellona and Regina among them. For this reason, he follows the developments in retail, and consumer trends very closely. Saying that they use credit card sales intensively in last three years, Boydak says that they take the provision of it extensively. Boydak draws attention to that at least 25 percent difference between the period in which they use credit card and today on turnover basis at least 25 percent and adds: “The biggest advantage in sales was realized by credit cards that provide installment opportunity.”
  Boydak, stating that “We make half of our sales by credit cards” also syas that the campaigns held by them had an important role in increasing sales chart.” Boydak expresses: “For all our brands, we organize campaign with credit card in each two months. Our campaign number throughout year reaches to 6.” We talked with Mustafa Boydak about the effects of credit card use on sales and about the penetration in Anatolia.”
  THE CONTRIBUTION TO ANATOLIAN COMPANIES
  Credit card usage has a great impact on the growth of companies in Anatolia. Credit card use has a significant contribution to the growth of Anatolian based companies.
  There is a significant difference between purchasing a product whose price is a thousand liras with cash and purchasing it by credit card. Thanks to the credit cards, the consumer can reach the products they need easily. If the credit card has an advantage of installment, they do not have to pay term difference.
  SIGNIFICANT MEASURE AGAINST INFORMAL TRANSACTIONS
  Utilization of credit cards is a very important factor in preventing informal transactions. One of the most important problems of furniture sector, in which we also operate, is not being able to be institutionalized and black economy. There are very few manufacturers like us in the sector, who became brands. As the utilization of credit cards increases, other companies in the sector have also started to pull themselves together. Because everything gets formalized as a result of credit cards. Therefore I believe that utilization of credit cards has a significant contribution for preventing black economy.
  CONTRIBUTION TO THE GROWTH OF GROUP
  Credit cards have a significant place in our lives particularly in the last 4 years. They have a great share in the sales that we made through our dealers, particularly in the last 3 years. While the share of credit cards in our total sales was between 10 and 15 percent, it has now reached to 50 percent.
  I should also state that this ratio is changing from region to region. In some of our stores, almost 100 percent of our sales are made with credit card. However this ratio is a bit lower in our stores, located in rural areas. Sale with credit cards is significant in metropolises. Therefore credit card has a serious effect on our sales. Although there is a partial cost for us to use credit cards, it is an easier and more comfortable sale for the dealer. So, dealers get rid of the payback problem. That’s another reason for dealers to prefer credit cards when selling goods.
  CAMPAIGNS ARE VERY IMPORTANT
  We are organizing serious campaigns with banks in the last 2 and 3 years in order to increase the utilization of credit cards in our sales and provide benefits to our consumers. We believe that these campaigns make significant contributions to our sales. We have agreements with totally 8 banks. But we can also work with different banks at each campaign.
  “IT WILL WIDESPREAD FAST IN ANATOLIA”
  How has the increase in income level and credit card penetration been reflected to shopping environment in Anatolia?
  Credit card utilization has not reached to the sufficient level of penetration yet in Anatolia. We expect that credit card utilization will increase in Anatolia in the coming years. However there is a significant increase too, compared to previous days. This is not only related with our sector. The utilization ratio of credit cards increases from durable goods to apparels. Credit cards are even being used in local groceries.
  What is the reason behind lower utilization rate of credit cards in Anatolia, compared to metropolises?
  Credit card utilization is very high in metropolises. However the identity of dealers is much more important in small districts of Anatolia. Shopping is made in a traditional manner. The advantages of credit card can also be offered by the dealer itself. Therefore credit card utilization rate is lower in rural areas.
  Is the credit card utilization rate increasing in other companies too in Anatolia?
  Credit cards are being used more day by day in companies that are selling consumer goods in addition to furniture. This increase does also have significant contributions not only for formalization of the economy but also provision of attractive advantages to the consumers. For example, the number of stores in Anatolia that has a POS machine has significantly increased. If we take one of our dealers in a rural area into consideration, the credit card utilization rate has increased from 10 percent to 50 percent today.
  
• Mustafa Uysal - Chairman of Turkish Tax Council
  “CREDIT CARDS ARE BRINGING TRANSPARENCY”
  Mustafa Uysal, Chairman of Turkish Tax Council, is considering these efforts as significant steps towards transparency. He says that the Council has recently implemented a project for payment of doctor and dentist fees via cards. He believes that it is possible to perform some efforts in the coming days to support utilization of credit cards while purchasing real estates. Uysal, who says that it will be mandatory to pay taxation debts by cards, adds, “Utilization of cards brings significant benefits and transparency to the development of formal economy”.
  Credit cards do not only make shopping easy. Utilization of credit cards is encouraged also to increase transparency. It is even possible to record many transactions formally as a result of utilization of credit cards. Therefore many efforts are made to widespread the utilization of credit cards in every point of consumption and shopping. Mustafa Uysal, Chairman of Turkish Tax Council, says that Tax Council is one of those organizations that is leading these efforts. He highlights that the last work of the council was to require the existence of a credit card reader at the offices of doctors, who are self-employed. Uysal believes that it is possible to make this practice mandatory for other professions too and informs us about the future of credit cards in our daily lives:
  “It will be mandatory to pay tax debts by cards in future. There might also be some works to use credit cards in purchasing real estates. Also the salaries of persons working in public organizations and pension salaries can be paid by cards.”
  We have talked with Mustafa Uysal, Chairman of Turkish Tax Council, about latest applications to be implemented for credit cards and benefits of these applications:
  Is it true that utilization of cards has a positive contribution for the national economy?
  The survey, conducted by Global Insight in 2003, clearly shows that card utilization has positive contributions to the development and growth of national economy. Credit cards have significant benefits particularly for the development of formal economy. They also assist in the development of financial infrastructure. They play a significant role in the increase of bank deposited amounts. They help for the transparency. They also enable the development of an internal control mechanism for the organizations. Since tourists can use any card in our country, our tourism industry is developed, too. We integrate with the global economy and achieve a growth in the national economy.
  What do you think about the utilization of cards in Turkey? It is observed that different cards are being used in many countries. However there are only credit and debit cards in Turkey. Do you have any effort to diversify the cards?
  Yes, there are mostly credit and debit cards in Turkey. But the cards are not only composed of them throughout the world. For instance, there is prepaid card. You load money to this card in advance and so you can only spend that amount. There are also expenditure cards and contactless cards. Contactless card is a type of card that performs transactions remotely without requiring the user to contact with the device. For example, you are in a taxi and you have to make the payment. Thanks to the contactless card, the money in your account is automatically transferred to the taxi driver’s account. This card can also be used in public transportation. In cash cards, the money in your account is automatically transferred to the counter party’s account.
  Corporate credit cards are the cards given by corporates to their staff. Actually, this type of card plays the most important role for transparency. When you travel for business purposes, you have some certain expenditure. When you pay them in cash, there might be complex situations about “what you have spent for which purpose”. But when you spend by using the corporate card, any potential abuses are prevented as all transactions are made through the banking system. Furthermore these corporate credit cards can be used instead of cheques and bonds. When you issue them to dealers and groceries, they make their payments with these cards. Most of these cards are not available in Turkey. Therefore card systems must also be improved in terms of diversification.
  Is Turkish market structure and consumer profile ready for such diversification?
  The infrastructure in Turkey is ready for issuing these cards. We will see that the environment for these cards would be better in upcoming days. We are already performing some works to extend the application areas. While we, the Tax Council, are performing these works, the Revenue Administration and Finance Department are also implementing some of them. For instance, they required the doctors, who are working as self-employed, to have POS devices at their offices. We can apply it not only for doctors but also for other professions, too. Cash cards can also be used as coins. We may not always have coins and have a problem when purchasing a low cost item. Cash card allows us not to carry coins in our pockets. When we don’t carry them, they will stay at the banks as deposits.
  Other card types allow people to spend only the amount that they have in their pocket. There is also hygiene side. When you carry a money in your pocket, it is transferred from you to me and then from me to another person. Money is transferred from hand to hand. So the infection does.
  So, as Tax Council, what type of works are you performing in order to increase card utilization? Do you have a model to follow?
  We believe that Korea is a country that can be model in card utilization. According to a survey, conducted in 2006, card utilization had a great contribution to Korean economy. It caused an increase in taxation revenues and deposits in the banks as well as in transparency and a decrease in informal economy. Korea’s credit card expenditure is equal to 201 billion USD according to 2004 data. In Korea, credit card, ATM or cash card systems were developed and measures for decreasing the transactions in cash were taken. Limitations were applied for cash payments to be made by the individuals. Credit card utilization was made mandatory for corporate payments of hosting and representation hosting. Discounts were applied to VAT, paid for credit card expenditures.
  Should a similar system be created in Turkey, too?
  We should also follow similar policies. We can even organize national lotteries, etc. for credit card expenditures in order to encourage them. Credit card can be used as a lottery ticket. There might be bonuses for credit cards. One percent increase in credit card expenditures caused 1.56 percent increase in VAT payments in Korea. So, there is a direct connection between VAT and credit card utilization.
  What kinds of practices were applied until today in Turkey?
  Certain limitations were applied to cash payments in Turkey. It is now required to make payments in cash, which exceed a certain amount, through the bank. It is also mandatory to pay rental fees that are higher than a certain amount through the bank, too. It is planned to require doctors and dentists to have POS machines. It will be mandatory to pay tax debts by cards in future.
  Has informal economy got bigger after collection of receipts has ended as a result of termination of tax refunding practice?
  No. Minimum subsistence allowance is applied instead of tax refund. It is much more advantageous than tax refund. Zero tax will be imposed to a person that receives minimum legal wage and has 4 kids. Tax load calculations that are applicable in OECD standards were not taken into consideration in tax refunds. However they are taken into consideration for minimum subsistence allowance since it is applied in all OECD countries. While we were applying tax refund, we had the highest taxes, imposed to salaries, among OECD countries. This was also very bad as an image. Foreign investors were deciding not to invest since taxes on salaries were high. However minimum subsistence allowance is deducted from the taxation. And when it is deducted, we achieve a quite good rank among OECD countries. This is still not enough. Some countries apply a flat tax rate in their taxation systems. They impose a single rate for all wages. However different discount rates can be applied to protect people with lower income by taking their social conditions into consideration.
  “Turkey is one of the most loyal countries for card debts”
  NUMBER OF CARDS IS INCREASING RAPIDLY
  There is not any reason for not increasing the types of cards in Turkey. Currently, there is a significant increase in the number of credit cards in Turkey, compared to other countries. While there were 4.8 million credit cards in Turkey in 1997, this number reached to 37.3 million in 2007.
  RECORD BREAKING INTEREST IN POS MACHINES
  The number of POS machines has increased from 58 thousand to 1.4 million. Turkey is also among the countries that has most loyal credit card users in terms of repayment of credit card debts. Citizens are paying their credit card debts by taking debt from others.
  PAYMENT RATIOS ARE HIGH
  Payment ratios are usually high. This is also an important income source for the banks. Therefore they want to increase the utilization of cards. The number of ATMs, which was 6,700 in 1997, has increased to 18 thousand.
  HOW DO THE BANKS SAVE?
  I believe that the increase in the number of ATMs and POS machines is not a very positive development. Making transactions through a single ATM and POS machine makes things easier. So the banks would also manage to save. The number of ATM cards has increased from 18 million in 1997 to 55 million in 2007.
  In which sectors should the card payment system be widespread?
  Are there other sectors that card payment systems must be widespread?
  It is not applied yet but one of the areas, in which informal economy is widespread, is real estate sector. For example, you go to the land registry office. There is a buyer and a seller. Let’s assume that you will buy a flat for 200 thousand liras. You withdraw your 200 thousand liras from the bank and put that money in your bag. You also keep a few people next to you while you are carrying this amount of money. The first danger seen widely is there are pickpockets watching people in the banks, who are withdrawing money. Your money might be stolen. There might be problems at the time of payment. There are also solutions for these problems. Special accounts can be opened at the banks for selling or purchasing real estates. The bank acts like a guarantor here. Then the buyer deposits the money to that account. The account is either paid or not to the seller, depending on the agreement between the buyer and the seller. Bank slip is presented to the land registry director. After necessary procedures are applied, the estate is registered to the buyer’s name. When the buyer says “I bought”, the money is transferred to the seller’s account. There will not be any problem in terms of the safety of the money. So the estate is sold at actual prices. Also the salaries of persons working in public organizations and pension salaries can be paid by cards. Retired persons have to wait in queues to receive their salaries. They have to wait in cold and hot weather. This situation also causes some tragic events. In order to prevent such events, you load the salaries of retired persons to their cards, which can be used with a PIN. He/she can withdraw his/her salary either at the closest ATM or shops at the grocery by using his/her card. When this issue was discussed, someone said that those queues are social places for them. That’s the socio-psychology aspect.
  
• Özcan Pektaş - Manager of Protection of Consumers and Competition
  “Two third of the consumers are using cards properly”
  Özcan Pektaş, General Manager of Protection of Consumers and Competition, states that credit cards make great contributions in eliminating informal economy. Saying that significant developments were achieved in this area, Pektaş adds, “We can also clearly identify the areas that the consumers spend usually thanks to card payment systems”. Pektaş emphasizes that if credit cards are used consciously they facilitate the life and says, “2 of 3 consumers use their cards properly. They benefit from these opportunities. They are not required to carry cash. When they make their payments regularly, they can compensate their 30 days of spending without paying any interest.”
  Card payment systems that include debit and credit cards facilitate the lives of consumers in many aspects. They also make significant contributions to the solution of informal economy, which is still very high in Turkey. When they are used consciously, they create growth and employment opportunities in different sectors.
  The Directorate of Protection of Consumers and Competition of the Ministry of Industry and Commerce, one of the most important followers of problems in cards, has taken the action. The directorate, which is currently preparing a draft bill for protection of consumers, is too hectic nowadays.
  Capital has talked with Özcan Pektaş, General Manager of Protection of Consumers and Competition, about the problems in credit cards and the works being performed for solution of these problems.
  What do you have in your agenda for credit cards?
  Last year the main problem was annual fees. For this issue, we have some communiqués announced. Also Consumer Problems Arbitration Board and consumer courts, the authorities that are authorized by law to solve such problems, are working too. If annual fees of credit cards do not exceed 827 TL, the problems must be addressed to Consumer Problems Arbitration Board. Since the annual fees of credit cards are not exceeding this amount, this board has worked a lot to solve the problem. There are some decisions of the board given in favor of the consumer as well as other decisions given in against of the consumer. However, as of today, there is not any finalized decision. We have stated in the communiqués we announced that arbitration boards must particularly decide about the applications. The Law on Credit Cards has a provision regarding annual fees. However there are other regulations too, stating that if the issues mentioned in Article 24 of the said law have not occurred, consumers cannot be required to pay any fee. We have highlighted this provision in our communiqués.
  Are there any projects that you are currently working on for credit cards?
  Credit cards were regulated for the first time with the Law No. 4822 and the Law on Protection of Consumers, No. 4077 in 2003. Then the Law on Debit Cards and Credit Cards, No. 5464, which regulates the rights and liabilities of the parties, was enacted on March 1, 2006. We are also currently working on a draft bill for protection of consumers. The works are still continuing. We aim to submit this law to the assembly and have it enacted until the end of first half of this year. This draft bill revises and regulates Article 10/A, pertaining to credit cards, and other provisions related with consumer loans in accordance with the works for harmonization of national laws with EU regulations.
  How do the banks approach to this new law?
  I don’t know the opinion of banks for this case. The duty of our ministry is to protect the consumers. We, of course, do not aim to put financial sector in a difficult situation while trying to protect the consumers. We aim to maintain the relationships in the most efficient manner.
  What is your opinion about the main reason of overdue credit card debts? What must be the solution?
  The problem arises out of the failure to implement the law exactly. The Law on Debit Cards and Credit Cards, No. 5464, which was enacted in 2006, stated that the credit limit can be at most 2 times higher than the income for the first year. This limit was increased to 4 times in 2007. However there is not any limitation as of 2008.
  How the problem, occurred in 2001 crisis, was solved? Are the experiences gained from that crisis being used in this crisis too?
  The Law on Protection of Consumers, No. 4822, was amended in 2003. Consumers that couldn’t pay their credit card debts were allowed to restructure their debts with temporary article 1, which was enacted with that amendment. Then, a second regulation was applied for restructuring of debts with the Law No. 5464, enacted in 2006.
  
• Doç. Dr. Mikail Alatan - Academic Member of Selçuk University
  Utilization of cards is increasing among civil servants
  90.2 percent of Turkish civil servants have credit card. 61.4 percent have at least two credit cards. 18 percent of total credit card transaction volume amounting to 172.9 billion TL is made by civil servants. These data are received from the survey, named “Credit Card Utilization Habits of Civil Servants”, prepared by Assoc. Prof. Dr. Mikail Alatan from Selçuk University. Atalan thinks that there is an increase in recent credit card utilization rates of civil servants and he believes that the reason behind this increase is the need for cash, the number of installments and payment opportunities offered by credit cards.
  The amount of shopping made with credit cards has increased by 16.9 times in last 7 years. Total transaction volume has reached to 172.9 billion TL as of November 2008. The share of civil servants in this amount is quite high in contrary to the beliefs. The survey, conducted by Assoc. Prof. Dr. Mikail Alatan from Selçuk University, on the credit card utilization habits of civil servants reveals this fact. Alatan says that average amount of one month of credit card expenditures of a civil servant is 1,000 TL. Therefore approximately 18 percent of total credit card transaction volume, amounting to approximately 173 billion TL, is made by civil servants.
  Alatan also says that the survey he conducted among 950 civil servants throughout Turkey shows that 90.2 percent of civil servants have at least one, 61.4 percent have at least two and 28.7 percent have at least three credit cards. His survey also shows that 65.6 percent of civil servants believes that credit card is a need. Alatan says,
  “Civil servants are using credit cards mostly for purchasing clothes. Other areas of expenditures are, respectively, food, restaurants, communication, furniture and decoration, transportation, training, entertainment, healthcare institutions, and their house’s electricity and water bills.” We have talked about the credit card utilization habits of civil servants in Turkey and the results of his survey with Assoc. Prof. Dr. Mikail Alatan:
  Why did you make such a survey?
  Credit cards are in our pockets today as a tool that we cannot give up. They are used more and more in the market in parallel with the technological developments. Thanks to credit cards, we can now shop from millions of markets and stores throughout the world without using cash. We can benefit from entertainment venues and services of travel agencies. We can even place orders online. Credit cards also allows us to withdraw cash from anywhere throughout the world.
  The amount of shopping made with credit cards has increased by approximately 16.9 times in last 7 years for these reasons. Total transaction volume has reached to 172.9 billion TL as of November 2008. The reason of such increase in credit card utilization is not only the capability of credit cards to meet the need for cash but also the desire of people to meet their unlimited consumption needs through limited resources. Furthermore, credit card is one of the best tools for extending their payments over a period of time. There are approximately 2,5 million civil servants in Turkey. Their fixed salaries are not sufficient to meet the needs that require cash payments. Credit cards delay the payments that civil servants are required to make for their expenditures by 40 days in average. Thanks to credit cards, civil servants can extend their payments over the following months by making only minimum payments or benefiting from installment opportunities. In other words, credit cards provide short term funding for people who have fixed and low income. They also enable them to spend money not only for their basic requirements but also for luxurious purchases. This survey aimed to identify credit card utilization habits of civil servants and reveal their thoughts on the effects of their credit card utilizations.
  When did you make this survey and by following which methodology? Can you give us information about your target segment?
  Questionnaire method was used in our survey. The questionnaire was made with 950 subjects, who were chosen randomly among 2,248,484 civil servants in Turkey as of June 30, 2007, based on 5 percent sampling error. The survey was conducted in 18 randomly selected provinces from various regions of Turkey, in which the number of civil servants is more than 10 thousand. These provinces and the number of questionnaires replied are as follows: Adana 77, Ankara 100, Erzurum 65, Samsun 40, Bursa 80, Bolu 25, Sakarya 32, Denizli 54, Konya 90, Malatya 48, Trabzon 65, Rize 29, Antalya 43, Manisa 39, Eskişehir 47, Muğla 33, Sivas 45 and Elazığ 38. The data were evaluated through SPSS 10.01 statistical package software. Credit card utilization habits were investigated under four main topics, namely amount of credit card expenditures, payment of credit card debts, follow-up of credit card statement, and credit card expenditure categories. Subjects were also provided 6 different statements to find their thoughts on the effect of credit cards on expenditures and they were asked how much they agree with these statements by using Likert scale method. The relationship between the sex, marital status, children, number of family members, age, education level, monthly income and number of credit cards that subjects use and their credit card utilization habits and their thoughts on the effect of credit cards on expenditures was tested by conducting Chi Squared and ANOVA methods.
  Can you share the main messages resulting from this survey with us?
  We found that there is not a meaningful relationship between sex, marital status and age and credit card ownership. However there is a meaningful relationship between the number of family members, education level, and monthly income and credit card ownership. As the number of dependents increase in the family, the number of credit cards decreases and as the education level and monthly income increases, the number of credit cards increases. The amount of monthly credit card expenditures of civil servants ranges between 500 TL and 1000 TL.
  As the number of credit cards owned, monthly income, education level and age increases, credit card expenditures do increase too. As the frequency to follow up account statements, monthly income and education level increases, the habit of paying entire credit card debt is increased too and as the age, number of family members and number of credit cards owned increases, the habit of paying entire credit card debt is lowered.
  As the monthly income, education level and number of credit cards owned increases, the frequency to follow up account statements is decreased and as the age increases such frequency is increased. Furthermore, the civil servants that have a kid follow up the account statements more frequently.
  Are the civil servants in Turkey using credit cards more than before? What is their opinion towards credit cards?
  Yes. For example, total transaction volume of credit cards was approximately 143 billion TL as of the end of 2007 and this amount was increased by 21 percent and reached to 173 billion TL as of November 2008. If we assume that one civil servant is spending averagely 1,000 TL per month with credit card, we can think that approximately 18 percent of this amount is made by civil servants.
  While 65.6 percent of civil servants were thinking that credit card utilization is necessary, 30.2 percent thinks that it is unnecessary and 4.2 percent does not have any idea. 57.2 percent of civil servants do not think that credit card is an indicator for social status, 28.9 percent thinks that it is an indicator and 13.9 percent does not have any idea.
  Do you think that the effect of credit cards on the expenditures of civil servants is high?
  This question is answered by the thoughts of civil servants on credit card. The results of works of Ritzer and Feinberg are also confirmed by the civil servants in Turkey. For example, 73.2 percent of civil servants think that credit cards have increased their expenditures, 63.5 percent thinks that credit cards have increased their luxurious expenditures, 74.5 percent thinks that credit cards cause irregular expenditures and 77.9 percent thinks that the installment opportunities provided by credit cards have increased their expenditures.
  Can it be claimed that credit card expenditures of civil servants make a significant contribution to the economy?
  Expenditures for consumption purposes have a significant place when calculating national income. The literature states that the factors that affect expenditures for consumption purposes are spendable income, wealth, market interest rates, inflation rates, psychological and sociocultural factors, but credit card expenditures are not included to this list. However, according to another survey that we conducted to find the effect of credit card expenditures on total final consumption expenditures, credit card expenditures take the first rank among the list of factors effecting total final consumption expenditures.
  How many civil servants have credit cards?
  Although 9.8 percent of civil servants do not have any credit card, 90.2 percent has at least one, 81.4 percent has at least two and 28.7 percent has at least three credit cards.
  Are civil servants usually happy to use credit cards?
  Civil servants are using credit cards mostly for purchasing clothes. Other areas of expenditures are, respectively, food, restaurants and hotels, communication, furniture and decoration, transportation, training, entertainment, healthcare institutions, and their house’s electricity and water bills. Singles are using their credit cards more for clothes, hotels and restaurants and entertainment expenditures. It is seen that there is not a meaningful relationship between other expenditure groups and marital status. While young civil servants are using their credit cards for clothes, restaurants and hotels, furniture and home decoration, entertainment and education expenditures more than the elder ones, elder civil servants use their credits for transportation expenditures more. There is not any meaningful relationship between age and other expenditure categories, such as food, communication, health and utilities. Civil servants that do not have kids are using their credit cards for clothes, restaurants and hotels, furniture and home decoration, entertainment and training expenditures more than the civil servants with kids. Those, whose family members are more, can use their credit cards less for clothes, food, restaurants and hotels, entertainment and healthcare expenditures and more for transportation and education expenditures. As the level of education increases, credit card utilization rate is increased in all expenditure groups. As the monthly income increases, credit card utilization is increased in all expenditure groups other than communication, education and healthcare expenditures. But there is still not any meaningful relationship between these three expenditure groups and income level. As the number of credit cards increases, credit card utilization is increased in expenditures for clothes, communication and furniture and home decoration but there is not any meaningful relationship between other expenditure groups and the number of credit cards.
  
• Prof. Dr. Cem Kılıç - Gazi Uni. Faculty of Economics and Administrative Sciences - Academy Member
  DO CREDIT CARDS DECREASE INFLATION?
  Prof. Dr. Cem Kılıç from Economics and Administrative Sciences Faculty of Gazi University, who researched the relationship between credit card expenditures and inflation, says, “We found as a result of our research that shopping made with credit card have an effect on inflation so as to reduce the inflation partially 6 months later.” He adds that shopping with credit card has a stabilizing effect on the prices in the long term.
  We conducted an empirical study by using questionnaire method with almost 600 persons and merchants. An economic model was set for this study. We finally found that there is a relationship between credit card expenditures and inflation, which is positive to the contrary of expectations.
  This positive development, i.e. increases, in credit card expenditures, does not increase inflation but decreases it. Their effect on the inflation is seen particularly 6 months later. In other words, a shopping that was made with credit card shows its effects on the prices 6 months later. Therefore we found in this research that shopping made with credit cards has a partial effect to decrease the inflation 6 months later.
  ENSURES STABILIZATION IN PRICES
  The shopping made with credit cards particularly has a stabilizing effect on the prices in the long term. Because when merchants purchase their interim investment goods with credit cards, they have approximately 30 days to pay for them. This situation has a positive effect in terms of inflation.
  It also has positive effects for the consumer. Consumers are allowed to pay their expenditures in installments. So the consumer can pay his/her debt easily and this has a positive effect on the inflation.
  We have also researched the effect of credit cards on manufacturing, inflation and informal economy. Actually it is very difficult to identify and measure the effect of credit card expenditures on employment. However credit card utilization has positive effects on GDP, as follows: We found that a credit card expenditure of 1,000 units causes 1,017 units increase in GDP. Therefore such increase in GDP is positively reflected to the employment in manufacturing. Particularly creating a space for enterprises to take a breath thanks to credit cards is a positive fact for manufacturing. It is quite natural that any positive effect in terms of manufacturing would also have a positive effect to the employment.
  THEY ARE NOT INTERESTED WITH INTERESTS
  We found that credit cards are used intensively in retail, food, textile and fuel consumption. One of the interesting findings for consumers was: Contrary to what is believed, consumers are not too much interested in credit cards’ interest rates. A very small group of people knows how much interest they pay for credit cards. The important criteria for consumers are installments, bonus money and miles, etc.
  Credit card expenditures increase manufacturing
  EFFECT EXTENDS OVER MONTHS
  Credit card utilization must be handled as a factor that increases money supply in the economy. Although the amount of emission stays same, credit cards have an effect to increase total demand since the income from future periods is also used. This effect, which can be claimed at the beginning, can be deceptive. The effect of demand, which was created actually as a result of installments applied for credit card utilization, has larger effect on increasing the manufacturing. The credit cards in Turkey are usually used for consuming the goods that have lower flexibility. When credit cards are used for installment purposes, the motive for manufacturing is created and the effect on increase of money supply is extended over months and inflation would be prevented.
  WHAT DO ANALYSES SAY?
  For this purpose, several analyses were conducted to find the relationship between inflation and credit card utilization. As a result of the studies, we couldn’t find any evidence that credit card utilization increases the inflation. The effect of credit cards on increasing demand is less than their effect on increasing the production. In other words, credit cards utilization increases total demand but its effect on increasing the production is much higher. We also couldn’t find any evidence that total amount of credit card expenditures is decreased when inflation rate is decreased too. In other words, credit card expenditures do not decrease because of a decrease in inflation.
  HOW DOES IT EFFECT THE INFLATION?
  The analysis showed that there might be a negative relationship between credit cards utilization and inflation. According to the findings, when credit card expenditures increase by 10 TL annually, the inflation decreases by 0.2 units per year and 0.04 units per quarter. If credit card expenditures increase, the inflation will also increase in a very small amount immediately after the expenditures but will then decrease within the following 3 periods. Similarly, as a result of an increase in credit card expenditures, the inflation will be decreased within the following 3 periods and then the effect will be negligible.
  
• Prof. Dr. Şükrü Kızılot - Gazi Uni. İİBF Academic Member
  “CREDIT CARDS ARE LIFESAVERS OF ECONOMY”
  Experts are lately sharing the same idea that credit card utilization has significant contributions for the economy during crisis… Prof. Dr. Şükrü Kızılot, an Academic Member of Economics and Administrative Sciences Faculty of Gazi University and a columnist in Hürriyet Newspaper, is one of those experts. He believes that credit cards are lifesavers of economy during crisis. Shopping made with cards also makes significant contributions to the national economy. Kızılot, who highlights that since an invoice must be issued for each sale made with card, VAT is collected by the state, says, “Credit cards also indirectly contribute to employment and growth of sectors”..
  Credit card utilization is debated for long years. Various ideas are raised for the benefits and damages of credit card. However experts say that if credit cards are used properly, they provide significant advantages to consumers. Elimination of the need to carry cash, provision of installment opportunities for shopping are only a few of attractive features of credit cards. Furthermore, credit cards have positive effects on the national economy. Experts are lately sharing the same idea that credit card utilization has significant contributions for the economy during crisis Prof. Dr. Şükrü Kızılot, an Academic Member of Economics and Administrative Sciences Faculty of Gazi University and a columnist in Hürriyet Newspaper, is one of those experts. He says that credit cards are lifesavers for the economy, particularly during the crisis. Highlighting that shopping made with cards make a significant contribution not only for consumers but also for the national economy, Kızılot says, “Since an invoice is issued for each sale made with cards, VAT is not kept by the seller and paid to the state. It also has indirect contribution to the employment and growth of industries.”
  Şükrü Kızılot adds that credit card utilization is not widespread enough in Turkey and his opinions on the contributions of card payment systems to the national economy are as follows:
  BRINGS SIGNIFICANT ADVANTAGES
  “Even very symbolic expenditures are made with cards in abroad. For example, 3 or 5 pounds are even paid with cards in UK. However, our habit to pay small amounts in cash still continues. Firstly, paying with credit cards has serious advantages. If you settle your debt on the due date, you can benefit from these advantages more. There are also campaign and installment opportunities. Using credit cards make contributions to the national economy, too. Credit card utilization helps in the formalization of expenditures. This habit is also important as the government receives resources.
  Actually credit card is a good lifesaver during crisis. But of course it should be used properly… Turkish people had always a habit to use credit cards. If you spend according to your monthly income, payments are not problems. Turkish consumers are more loyal to their debts according to statistical data. But of course there are some people who don’t pay their debts. There are also some people that use credit cards without having any enough income and then say “excuse me”.
  One of the most debated issues today is about the interest rates applied to credit cards. It is claimed that interest rates of credit cards are very high and interest rates applied for deposit accounts and consumer loans are much lower. I made a research in this area and had a look to the interest rates in other countries. But I found that the situation is same there too. For example, when you compare the national inflation rate and credit card interest rates or when you take interest rates of consumer loans into consideration, you will see that the interest rates are 8 times higher than the inflation rates in some countries. This is even 30 times in countries, such as Brazil. Therefore, when you compare the interest rates with other countries, it is seen that the system is same throughout the world. Therefore you cannot raise too many objections. Credit card is an unbelievable advantage for a person that spends according to his income.
  ADVANTAGES OF PAYMENTS WITH CARDS
  There are three important problems in Turkey: Informal economy, current account deficit, and unemployment… These problems continue for years. Turkey is either collecting taxes or receiving debts to have income. Taxes are collected in return of nothing, they are not returned and cost of collecting taxes is only 1 percent. However, when the government receives a debt, it reimburses not only the principle but also the costs. The cost of debt can sometimes reach to 18-20 percent. And sometimes, particularly in extraordinary days, the costs reach to 100 percent. So, the interest rate of debt that the government receives is higher. Therefore collecting taxes is much more attractive for governments. The government collects 85 percent of the budget, needed to provide public services, such as constructions, education, health and defense, from taxes. When it fails to collect them, the government either receives debt or sells some of its assets through privatization. For example, Turkish Telecom was sold and the proceeds were added to the budget and then they are used.
  When a shopping is made with credit card, the counter party is required to issue an invoice. So the economy becomes more formal. Payments with cards do also have a chain advantage. For instance, you purchased a cloth from a store and paid with your card. The seller issued an invoice. Since the seller issued an invoice, it also must receive an invoice from the wholesaler, because it cannot sell goods without invoices. So the government receives an income and transactions are put under formal economy. Then the wholesaler goes to the factory and purchases goods with invoice. Similarly the factory is required to receive goods from raw material seller with invoice. The chain goes like that and the system is recorded. Therefore, credit card utilization is useful in preventing the informal economy problem in Turkey.
  SCRATCH CARD SYSTEM
  There is a project that I developed to prevent informal economy. There was tax refund system in the past. Everyone was receiving receipts in return of their shopping and documenting them. This practice was abolished due to a misdirection of IMF. It would not be established again. When tax refund was abolished, the government’s income was seriously decreased.
  My suggestion is a kind of scratch card system. I saw it in China. There was a gray small box on the receipts you took from restaurants. When you scratch them you win various amounts, such as 10, 50, or 500 Yuans. If you couldn’t win, you see a message, “Thank you for your contributions to Chinese finance department”. If a similar system is applied to the invoices or receipts in Turkey, I believe that everyone will take their receipts. Tax income will boost. This system can be tried in a pilot area. I strongly believe that income will boost. However, the government is not implementing this system. I guess they worry that this might be perceived as a kind of gambling. But, on the other hand, there are public institutions, such as National Lottery, etc.
  Then the only choice we had is payments made with cards. If you give 2-3 cash points to card payments and therefore people believe that they will have an advantage when they take receipts, I’m sure that taking a receipt becomes a widespread habit and economy becomes more formal. The government would not only collect 18 percent VAT and other taxes imposed to revenues, but the taxation system would also be more established as a chain reaction. Furthermore, the interest problem, which is complained a lot by the people that couldn’t pay their credit card debts, would be solved. Because when 3 base points of the interest is paid by such incentives, the interest rate would only be one percent and it would be even less than the interest rate of consumer loans. So one can enjoy the best of both worlds. The politicians should take this system into consideration.
  EVERYONE WINS
  One of the most effective ways of overcoming the informality problem of Turkish economy would be the utilization of debit and credit cards. If card utilization is encouraged, everybody wins.
  If cash bonus incentives or scratch card practice is applied for card payment systems, I believe that Turkish economy would be better. Let’s try it. Everyone is interested in such things. It won’t even cost a lot for the government. Promotional flats can be received from big construction companies or banks can support this practice in cash. If people would see a news in the newspapers, such as “The man, who had to evacuate his rented house has won a house when he scratched the receipt he took for the bread he bought”, I’m sure that they will start to receive receipts again. Different awards, such as automobile, white goods, etc. can also be included to these campaigns, which will be organized by the Ministry of Finance. I strongly believe that everyone will receive receipts when this is applied. Even his/her companion reminds him/her to take the receipt if he/she forgets to do so. This is feasible. This can be done as the government already owns organizations, such as National Lottery, horse races, etc. It is not considered as gambling because you are not purchasing luck in return of money. That’s the receipt of a good that you purchased. In the end, Turkish economy will win.
  According to our current legislations, if there will be any counterfeit invoice among the invoices you receive, you might be sentenced with imprisonment, which is a very bad practice. But if the payments are made through the bank system, you will not be imprisoned for such counterfeit invoices. This issue, which causes discomfort for millions of artisans, merchants and companies, can be prevented by the utilization of credit cards. Therefore it is possible to avoid from the risk of imprisonment by using cards.”
  “Card payments system prevents leaks”
  GOVERNMENT’S INCOME WILL RAISE
  The only benefit of card payment systems for the government is not VAT. The revenue from that sale is another benefit… The government will receive the income tax or corporate tax from the revenue gained from that sale. There are also some products subjected to Special Consumption Tax. The government would be able to gain revenue from formal sale of those products. For example, SCT is high for products, such as perfumeries, sun protection creams, white goods, alcoholic beverages, etc. Even the ratio of SCT is 25% in Coca Cola, which is a world record. The SCT imposed in Turkey, which is more than 200 percent for alcoholic beverages, is higher than EU average.
  WE HAVE THE RECORD IN TAXATION
  Similarly, Turkey has the world record for mobile phones. Although the average in 50 developing countries is 17.1 percent, this ratio is 58 percent in Turkey. Same for automotive. Although the ratio of taxation is around 21-22 percent in average in EU, this ratio reaches to 117 percent in Turkey. So, there are price differences arising out of taxation differences. VAT is also received from SCT, i.e. tax is applied to tax, which is an interesting situation. Turkey applies to approximately 400 percent tax to refinery output prices of fuels. This is another world record. Actually Turkey is a country of records for taxes. I wish we had records in other fields. Unfortunately, these practices make fuel smuggling more attractive.
  PROBLEMS ARE SOLVED WITH CARD SYSTEMS
  NOTARIES EARN MOST! When we take a look to the tax statements of occupational groups, we see that restaurants earn the lowest income. For example, they declared that they earn 257 TL per month in average, which is less than the minimum legal wage, which was equal to 666 TL. It is not possible for them to live with such amount. The income declared by other occupational groups, such as furniture manufacturers, local groceries, tooth implantation manufacturers, etc. are also lower than minimum legal wage. Since it is not possible for them to pay their house’s rents and grow their kids, there is something wrong here. Banking is the highest earning industry. Because they are within the formal economy. Iron and steel industry takes the second rank.
  GOVERNMENT’S INCOME IS DECREASING
  The reason behind this situation is the fact that consumers were used to take receipts but noone is taking now. Restaurants are giving receipts only to those persons who pay the bill by card, they don’t give others. Same for groceries. When a receipt or invoice is not issued, the government’s revenues decrease. These are the occupational groups that declare the lowest income. But I believe that those, who declare the highest income, are not declaring the truth also. For example, doctors declare that they earn 1,598 TL per month in average. However, almost all doctors have cars, houses, and credit card expenditures. Now POS devices are given to doctors. This is a good practice. I believe, their official income will also increase.
  ACTUAL EARNINGS ARE NOT SEEN
  Notaries take the lead in the list of occupational groups that declare the highest income. Because notaries have to document every work they did. Therefore they take the lead. I’m sure that there are other occupational groups that earn more. For example, we know that singers, who declare monthly average revenue of 2,832 TL and take the third rank in the list of occupational groups that earn most, are earning significant amounts even in one night. However, this situation is not seen in the lists. It is particularly significant to encourage card payments in service sector. For example, receipts are not received in hairdressers. People are not asking for receipts because they are useless at the moment, they pay in cash.
  
• Nazmi Karyağdı - Head of Strategy Development Office of Internal Revenues Department of the Ministry of Finance
  CREDIT CARDS IN STRUGGLING WITH INFORMAL ECONOMY
  The ratio of expenditures made with credit cards to end consumer expenditures in private sector was less than 10 percent 8 years ago. This ratio has increased to 30.2 percent in 2007. The number of credit cards has increased by 2.6 times in last 6 years and now exceeded 37 million. The number of debit cards is approximately 57 million. These numbers are very important for Revenues Administration. Because they show that the ratio of formal economy is increasing in the sectors, which address to end consumers. Nazmi Karyağdı, Head of Strategy Development Office of Revenues Administration of the Ministry of Finance states that choosing the payment instruments that are easy to be registered is an important solution method in order to struggle with informal economy.
  Karyağdı, who says, “Credit and debit cards help Revenues Administration in transition of the economy from cash system to electronic system”, highlights that tax audit is performed easier and much productive thanks to cards. Revenues Administration of the Ministry of Finance examine the taxpayers, for whom there is a difference between the declared value added tax base and sales they made with credit cards. Taxpayers, for whom there is a difference between the expenditures and declarations, are audited. Furthermore, it is possible to collect taxes by credit card as of October 6, 2008. Currently, 4 banks have integrated their systems with the system of Revenues Administration. It is expected that the number of banks in this system will increase soon. Revenues Administration is currently working with BRSA in order to determine the feasibility, technical requirements and capabilities of POS devices as cash registers, which is a part of “Strategic Action Plan for Struggling with Informal Economy”.
  We have talked with Nazmi Karyağdı, Head of Strategy Development Office of Revenues Administration, about the effect of cards payment system to informal economy, the role of credit cards in harmonization with taxation and new action plans.
  CARDS REPLACED CASH AND CHEQUE
  “The developments in banking in parallel with technological developments have caused important changes, particularly in payment systems. ‘Money’, which plays a significant role in economic life, has converted its function and started to continue as registered money in electronic environment. Cards payment system, which is usually identified with credit card payments but offer different utilization opportunities such as debit cards and prepaid cards, have been developed too fast and started to replace payments in cash and cheque.
  It is true that informality is increased in everywhere, where the cash economy becomes widespread. When business operations are performed in cash or through barter method, evidences of payment are immediately terminated. However, choosing payment instruments that are easy to be recorded, is observed as a significant solution method in order to struggle with informal economy.
  THE NUMBER OF CREDIT CARDS INCREASED BY 2.6 TIMES IN 6 YEARS
  It is seen that card payment systems become widespread lately as a result of the trust for debit and credit cards market, which is considered as a tool for encouraging formal economy. For example, the number of credit cards, which was approximately 14 million at the end of 2001, has exceeded 37 million at the end of 2007. Similarly, the number of debit cards, which was 32 million at the end of 2001, has reached to 56 million at the end of 2007.
  In parallel with this increase in the number of debit and credit cards, it is observed that the share of transactions, made by debit and credit cards, is increasing day by day among the private consumption expenditures and gross domestic product.
  BIGGEST ASSISTANT OF REVENUES ADMINISTRATION
  The ratio of expenditures made by credit cards to total amount of end consumer expenditures in private sector was less than 10 percent in 2001. It is seen in 2007 that approximately one third (30.2 percent) of end consumption expenditures in private sector are made by credit cards.
  The meaning of these numbers for Revenues Administration is the beginning of increase in the ratio of formality in sectors that are related with end consumption expenditures.
  As a summary, credit cards, like other instruments in the banking system, assist to Revenues Administration in transition of economy from cash system to a more electronic system.
  SIGNIFICANT FACTOR FOR FORMALIZATION
  As Revenues Administration, our main strategy in struggling with informal economy is to ensure self-compliance of taxpayers with taxation laws and to ensure that the taxes, which are imposed by laws, are declared and paid in time as required by the laws.
  Credit cards ensure that tax audits are performed easier and in a more efficient manner. Therefore they play a significant role in preventing informality. Banks and other organizations, which provide credit card reading machines (POS machines and Imprinter devices) are sending the tax IDs of member merchants, to which they have provided these devices, and monthly amounts of sales of these merchants that were made by credit cards, to our administration.
  COMPLIANCE WITH TAXATION LEGISLATION IS EASIER
  We sent letters to some taxpayers recently and told them that there are differences between the value added tax bases that they declared and the amount of sales they made with credit cards. They were asked to visit tax offices and correct such difference if the said difference is real or to explain the actual situation to their tax offices with relevant documents if they believe that the difference is not real.
  According to a project, implemented in 2008, the taxpayers are now capable to achieve their POS details through Internet Tax Office, located at www.gib.gov.tr. So, both taxpayers and Revenue Administration can achieve compliance with taxation legislation at a very low cost.
  NON-COMPLYING ONES WILL BE AUDITED
  The information received from banks are used to find taxpayers who are not complying. Amounts of sale, made by member merchants with credit cards, to which the banks have provided relevant devices, are compared with their declarations. Taxpayers, for whom there is a difference between such information, are audited.
  Based on this information, it is clear that widespreading of credit card utilization makes a significant contribution to the formalization of economy.
  ACTION PLAN FOR STRUGGLING WITH INFORMAL ECONOMY
  “Action Plan for Struggling with Informal Economy”, prepared by several public entities and organizations under the coordination of our Revenues Administration, highlights the relationship between cash economy and informal economy. The action plans also include an action for determining the feasibility, technical requirements and qualifications for converting POS machines to cash registers, which will be under the responsibility of BRSA and our Administration. It is also stated that BRSA will perform the legislative works to ensure that the infrastructure for utilization of debit and credit cards is improved to meet security requirements.”
  USED FOR COLLECTION OF TAXES
  After the execution of protocols with some banks, with whom our Administration has tax collection agreements, the taxes have begun to be collected with credit cards as of October 6, 2008. Based on these protocols, Motorized Vehicles Tax, traffic fines and toll fee and administrative fines imposed to vehicles that have passed through highway tolls without paying their fees, are collected through credit cards without any commission fee. 4 banks have integrated their systems with the system of Revenues Administration and it is expected that the number of banks will increase soon.
  Credit cards can be securely used at the website of Revenues Administration by using the Virtual POS under “Internet Tax Office/ Motorized Vehicles Tax Office” section or the branches or Internet banking websites of contracted banks.
  
• Nuşin Oral
  The recession in economy is overcome with the credit cards…
  Can you give us information about the role of credit cards in retail sector?
  The retail sector, whose estimated revenue in 2007 is 150 billion USD, is the locomotive of Turkish economy as it stands for one fourth of total GDP. The ratio of credit card utilization in this sector with such revenue is approximately 70 percent, although there are some differences within the sector. Credit cards and particularly the loyalty programs that provide installment opportunities for the customer, brings significant acceleration for the retail sector. Although single payment transactions have a significant share in non-food, installments play a significant role in apparels and white-goods sectors.
  What is the effect of credit cards on sales?
  Currently, there are 190 thousand points of sale with 179 shopping centers and store avenues. Average number of cards per person is 2.5 in Turkey, which is the 3rd country in terms of number of credit cards and 4th in terms of transaction volume among Europe with approximately 32 million credit cards. As it can be seen from these numbers, cards are used intensively in Turkey. This intensive utilization positively affects the sales in retail sector.
  Do the credit cards contribute to national economy in these days, during which we have a domestic recession?
  Consumers particularly prefer credit cards instead of cash during economic recessions. Since the installment features of cards facilitate the expenditures, it becomes easier to control income and expense. Continuation of expenditures during economic recessions is very important for the economy. There might be some decreases in credit card expenditures in such times. However such decreases stay at the minimum level thanks to the advantages of credit cards.
  Do the credit cards have any effect on consumer behaviors thanks to their features (installments, bonuses, campaigns, etc.)?
  Since consumers do not spend all the money they earn at once and are capable to divide their expenditures into installments, they do not postpone their shopping and can balance their budgets. Therefore installment is a great advantage for them. Although high number of installments is very important for sectors, such as white goods, furniture, etc. 10 or fewer installments are widely preferred for non-food retail sector. The bonus features of cards are not an encouraging advantage but creates benefit by providing an additional advantage to the consumer. The campaigns applied by the banks throughout the sector or only for certain retailers contribute to the increases in the revenues of these retailers. However similar campaigns organized in the same period may cause the consumers to receive too many messages. Therefore differentiation in campaigns may create more benefits for retailers, banks and consumers.
  Can you evaluate the connection between your industry and card payments industry?
  Approximately 70 percent of Turkish retail sector is traditional and therefore informal. Informal economy does not only cause a decrease in national income but also causes abuse of employee rights and problems in consumer rights. Therefore credit cards ensure that transactions are formally recorded and organized retail sector is supported. Organized retail sector encourages foreign players to penetrate into Turkish market and brings dynamism to the economy. In summary, retail sector benefits from credit card utilization.
  
• Mehmet Nane - General Manager of Teknosa
  Shopping is not Postponed with Credit Cards
  Mehmet Nane, General Manager of Teknosa states that credit card is preferred by almost 90 percent as a payment method in retail sector, and adds that special programs of credit cards creates differentiation in competition thanks to their special programs. Nane’s opinions for this case are as follows: “We see that credit cards have an effect on the sales in parallel with their market shares. Different discount campaigns organized by credit cards do also have an increasing effect on sales. We know that consumers have 1 or 2 credit cards in their pockets in average. Therefore, when the payment stage comes for the consumer that decided to make a purchase and when there are an attractive number of installments, payment postponement or promotion opportunity, given by one of his/her credit cards, it becomes more possible for the customer to use that card and purchase the good or service. Credit cards provide various opportunities to consumers in payment through different campaigns and allow them not to postpone their shopping decisions. There are also various consumer friendly practices, such as allowing the cardholder to use bonus points that he/she has accumulated. These practices assist the cardholders in continuing to take shopping decisions despite of recessing economy. There are close and synergic relationships between credit cards and electronic retailers sector. As Teknosa, we organize synergic campaigns with major credit cards throughout the year, which might have positive contributions to our revenue. Continuity is the main element of these relationships. We are also aiming to maintain the advantages for our customers by organizing not only regular but also short and attractive campaigns for our consumers with credit cards.””
  
• Berna Kural Okandan - CFO of C-A Turkey
  Installments are a Reality of Turkish Market
  Credit cards are widely preferred by our customers in our sector. We have also achieved technical developments thanks to the importance given by the banks. Practical use, installment opportunities, etc. provide significant flexibilities to the users. Installments have also become a standard in the sector. Our customers take not only the price but also installment options into consideration during the shopping. As C-A, we are offering wide range of products in apparels and accessories. In this area, the quality and price of products are more important than the number of installments. We particularly aim to sell trendy and high quality products at suitable prices. Our purpose is always to support our customers with affordable prices. Therefore, instead of offering too many different installment options, we are providing high quality and trendy products to our customers at suitable prices. But we are also providing various installment options to our customers due to current situation of Turkish market. After spending one year here, we saw that the volume of sales with credit cards is much more than our branches in Europe, in which there are 1220 stores. Therefore we pay attention to intensive utilization of credit cards in Turkey.
  
• Bekir Boydak - Member of Board of Directors of Boydak Holding
  Installments do not only increase sales but also makes the economy more formal
  Credit cards are now widely used in sectors, such as furniture, white goods and electronic devices, in which promissory notes were used a lot in the past. Credit cards provide many benefits not only to the buyer but also the seller. Bekir Boydak, Member of Board of Directors of Boydak Holding, the owner of Istikbal Furniture, one of those organizations that use the advantages of credit cards most thanks to the campaigns they organize with the banks, says the following about their sales, made with credit cards, “Payments with credit cards are initially facilitating our lives. They also ensure that informal economy is formalized. As Istikbal Furniture, we are a company that organizes many campaigns for credit cards. Last year, the share of credit card in our total revenue was around 40 percent, but this year this ratio is increased. Today we are partnering with almost all banks. You can see 10 different POS devices in our stores. We are also organizing various campaigns with the banks. Banks are diversifying these campaigns with the number of installments and we are diversifying them with the campaigns.”
  LONGER TERMS ARE NEEDED
  Bekir Boydak, who says that they are very satisfied from installments, also shared their expectations from these practices and added, “As Istikbal Furniture, our sales volume is high. Therefore installment opportunities in credit cards are very important for us. We are providing this service also to all credit card users since 2001, the date that installments were started to be applied. Long maturity periods in installments do not only facilitate the payments for consumers, but they also increase the sales volume of our company. Average amount of shopping per person is 1,000 TRY in our country. If you purchase several pieces of goods, the amount is increased. We want that when the amount of shopping is increased, we could offer installment opportunities longer than 12 months to our customers.”
  
• Prof. Dr. Şükrü Kızılot - Head of Finance Division of Economics and Administrative Sciences Faculty of Gazi University
  Effect of credit card utilization on informal economy…
  One of the most important problems of Turkish economy is high ratio of informal economy. Informal economy is not only the problem of Turkey but almost all countries throughout the world, including developed countries. However, in terms of ratio, the informal economy is very high in Turkey, compared to developed countries. If payments with bank cards become widespread, it will become certain that informal economy loses the ground. Payment with bank cards is particularly important for taxation income.
  The role of payments with bank cards in purchasing goods and services is very important in terms of Value Added Tax, Income Tax, Corporate tax and Special Consumption Tax.
  If receipt or invoices are received in daily shopping, the company that issues them also had to record their revenues to their legal books and declare and pay the VAT to the relevant tax office.
  When the payments are made by bank cards, the seller is required to issue receipt or invoice. Because, if a company or person fails to issue any invoice or receipt for any sale made with a bank card, such failure can easily be found as a result of any audit to be conducted on the bank records.
  When audit staff of the Finance Department examines the bank records, they can easily find whether any invoice is issued or not in return of the money transferred to the bank accounts and sales, for which a document was not issued, can be easily found and “tax base differences” can be easily detected.
  In addition to the amount of difference in terms of VAT and Income or Corporate Tax, same amount of the difference is requested as “tax loss fine”. When the imposed tax is going to be collected, a “late fee” for the period between original due date and actual payment date of the tax is calculated.
  Those that sell without issuing any receipt or invoice have an opportunity to make payments informally. So, they may not receive invoices from the goods or services they purchase, too.
  However collections to be made via bank cards will require issuing invoices and so taxation loss in this area will be prevented.
  As informal transactions are prevented with payments made with bank cards, more taxes will be collected and this will decrease indebtedness of and interests paid by the government.
  The biggest item in Turkey’s budget was interests for years. However as taxation income is increased when informal economy is prevented and bank cards are used more, Turkey will take less amounts of debt and so the interests paid will decrease, too.
  Payments with bank cards will also help to avoid from counterfeit invoices and to ensure that VAT discounts are accepted.
  General Communiqué of the Ministry of Finance, No. 84, states that if payment is made through banks or private financial institutions, the person or entity that received the invoice will not be subjected to any monetary or imprisonment fine due to counterfeit invoices.
  Removal of tax refund initially for retired persons and then waged employees has negatively affected the amount of receipts taken by these persons and significant decreases were observed in VAT, income and corporate tax proceeds. If payments made with bank cards are encouraged and supported with gifts, bonuses, etc., the problems that were caused by the abolishment of tax return might be solved to a certain extent.
  It can be claimed that informal employment is in a decreasing trend in return for the increase in transaction volume of credit cards, particularly after 2004. When the payments are made with credit cards, the formality level of companies has increased and this has triggered investments, too..
  There is also “informality within formal economy” issue, which is as significant as informal employment but cannot be seen directly. Persons that are employed formally but wages of which are declared less than their actual wages are considered as informal. The results of this fact are as negative as informal economy. This does not only cause a loss in taxation income, but also cause a loss in the revenues of Social Security Institution. The new Social Security and General Health Insurance Law, which will be enacted as a part of Social Security Reform, brings a new arrangement to solve this problem. This arrangement requires to pay the wages through the banks and by using card payments and authorizes relevant ministries to implement the arrangement. So, such utilization of bank cards will help the records to be more transparent and it will end informality within formal economy.
  The payments to be made through the bank cards will not only have positive effects on the revenue and expense balance of social security system but also on taxation revenues of the budget. On the other hand, such utilization of bank cards will prevent persons to gain unfair revenue through informal actions within the formal economy.
  
• Ekrem Akyiğit – Chairman of United Brands Association (BMD) and CEO of Collezione
  Credit card is our most important weapon in struggling with informal economy
  Ekrem Akyiğit, Chairman of United Brands Association (BMD), which includes the most known enterprises of Turkey with the highest brand values, is one of the persons that closely knows card payment systems. Akyiğit, who represents 125 brands from many sectors as the chairman, is also the owner and CEO of Collezione. Ekrem Akyiğit evaluated the relationship between retail sector and credit cards for us and emphasized the advantages they offer for the growth of retail sector. However, another point that Akyiğit emphasized was the struggle with informal economy. He highlighted that almost half of Turkish economy is informal and credit card is a significant factor in the struggle against this problem. Akyiğit answered our questions as follows:
  Retail sector is a critical sector that develops and changes rapidly, interacts directly with the customer, and does have serious competition and the behaviors to gain customers can change quickly in this sector. Brands that are targeting 18 years old and higher in retail sector, are selling 70 percent of their goods with credit cards and this has a direct effect on the sector’s growth. Utilization of credit cards more than cash in recent years has also activated the retail sector. Credit cards also helped people to consume more and use their future purchasing power in advance. When e-commerce figures of 2007 are looked, it is seen that 5.5 billion TRY was spent through virtual POS transactions. As it can be seen here, credit cards continue to be the most important weapon against informal economy. Almost 50 percent of Turkish economy is informal and widespreading of credit card utilization becomes much more important.
  “CONTRIBUTES TO BRANDING PROCESS OF THE RETAIL SECTOR”
  You say that credit cards have activated the sector. What is the effect of this acceleration on sales?
  Average size of carts is higher in credit card sales than cash sales. The consumer’s resistance against the price is reduced as he/she doesn’t pay immediately. High quality goods are sold easier and customer loyalty is achieved. The tendency to purchase increases in credit card shopping. Distribution of monthly sales is more balanced. Credit cards are used more in special days and for buying gifts. Banks also share detailed credit card shopping data and demographic data of customers with the merchants and ensure them to know their customers well and apply special campaigns for them. They also help the companies to have an updated database.
  What is the contribution of credit cards towards the economy?
  In addition to the contribution of credit cards towards sale, they also slowdown the decreases in total retail revenue during recessions and prevent bigger problems that might occur in economy by increasing the shopping ratio of consumers. If we were in a time, during which the sales were made only by cash, the negative effects of same recessions to the economy would be much more. Most important factor of having such softer transitions is the credit cards. Furthermore since the ratio of bouncing credit cards is only 6 percent according to the data of BRSA, it is clear that there is not any bottleneck in the system.
  “CAMPAIGNS HELP THE INDECISIVE ONES”
  What are the effects of features, such as installments, bonuses, campaigns, etc., on the behaviors of consumers?
  Installment feature of credit cards became an instrument, used by consumers for shopping that cost more.”6 months installments” is the most preferred option in apparels sector. Consumers began not to prefer more. If bonuses are allowed to be used in the sectors that they were earned and if the banks direct the bonuses to such sectors instead of certain ones (such as vacations and travels), the current benefit would be more. The campaigns also help indecisive customers to facilitate their shopping decision and continue to create added values.
  Does your sector have any expectation from card payments sector for the future?
  In addition to the contributions of credit cards for preventing informal economy, we believe that their contributions to the sales thanks to the campaigns and their contributions to the branding processes of the companies in our sector will continue more in future and accelerate the growth of our sector.
  
• Selçuk Güzenge
  “Credit cards have accelerated the growth of our sector”
  We all know the progress of Turkish retail sector in last 10 years. There are of course many reasons behind this development, such as free market economy, positive growth in economy, increase of national income, changes in consumers’ behaviors, but for me, the most important of them is the credit cards, which became an inseparable part of our lives today. Credit cards have changed our way of purchasing completely and irrevocably since the day they entered our lives. We were so in need of installments, which were introduced by credit cards, that we have adopted ourselves quickly. Individuals, which form the societies in our today’s world that develops economically and socially day by day, are always in search of ways to ease their lives. As a result of such searches, the amount of money being used is decreasing but credit cards, which emerge as a new instrument for payment, become widespread.
  Today, it is impossible for the retail sector to stand on its own without credit cards. Furthermore, it is a fact that the bonuses and extra installment campaigns, organized by banks through their credit cards, are feeding the desire of consumers to purchase and breaking their resistance against prices and these have accelerated the growth of our sector.
  
• Alp Tiryaki - CEO of VF Ege
  “Credit cards will spread through Anatolia.”
  I think that credit cards are managed very creatively and efficiently in Turkey. Today, approximately 35 percent of the population is active users of credit cards. We are in top 4 among Europe both in terms of transaction revenue and number of cards. I believe that the campaigns organized by the banks according to the calendar of retail industry have a significant role in this success. The credit card market will also grow in time thanks to such campaigns and the growth of industry and credit cards, which are mostly used in big cities currently, will spread to other cities of Anatolia soon.
  The number of our customers shopping with credit card is increasing. We can say that the ratio of utilization of credit cards in our stores has exceeded 50-60 percent and it will continue to increase with new shopping centers and other stores opened recently. Another important issue is the fact that credit card is a very strong system in struggling with informal economy. Since credit cards can protect VF, the largest apparel company of the world, and other brands in the sector from informal economy, they become more important for us.
  Furthermore, raising the awareness of credit card users must be a social responsibility of all of us, so they can spend in proportion with their income and visit our stores again and again in the future. I also believe that user data of credit cards must be analyzed well because they can create a project that might be implemented together with the banks and stores.
  
• Aslı Karadeniz - General Manager of Boyner Büyük Mağazacılık
  The effects of card payment systems on the development of retail sector are very positive.
  The effects of card payment systems on the development of retail sector are very positive. Card based campaigns, customer bonus programs and campaigns of member merchants, organized for special days, such as Mother’s Day, Father’s Day, Christmas, etc. as well as for other periods are positively affecting the shopping of customers. We are offering different card programs in our stores during different periods and so we are always keeping our customers interested in our stores and we are receiving positive feedbacks from them.
  Although this is not a payment system,”Boyner Key”, our loyalty program that we continue to apply in our stores, has positive impact on gaining and maintaining the loyalty of our customers. Installment campaigns were also very effective when they were implemented for the first time. However such “long term installment campaigns” were started to be preferred more for durable goods and less for other sectors, particularly apparels, mainly due to large amounts of sale of house and car loans. We are also monitoring the positive effects of bonus, discount and shopping cheque campaigns, organized by card payment systems, with the campaigns that we organize time to time. Feedbacks of certain campaigns might be much more positive, depending on the season and structure of card program, e.g. cheque in return of shopping is more effective during Christmas season whereas installments or bonus campaigns have more positive feedbacks during high seasons.
  
• Abdullah Kiğılı - Chairman of Board of Directors of Kiğılı Giyim
  How were we shopping without credit cards?
  Abdullah Kiğılı, Chairman of Board of Directors of Kiğılı Giyim, who says, “Same as the questions of how we were communicating or getting information in the past without mobile phones or Internet, another question that we have difficulties in answering was about credit cards”, brings a different perspective to the case. Kiğılı says that credit cards make life easier and he has different ideas, “We are tired, we lose time and we even sometimes purchase more expensive products without credit cards, which is available almost at everyone, ranging from students to businessmen” and his opinions for credit cards are as follows:
  Directs the behaviors of corporates
  “It is a fact that credit cards, which found a well-established place in our lives, accelerate the shopping trend when we take their features, such as bonuses, installments, installment postponement, which encourage spending, into consideration. Furthermore, customer segmentation details, such as age range, sex, shopping habits, etc. direct the corporates in order to ensure customer satisfaction.”
  Shopping Centers and credit card utilization
  “Long business hours and hectic city life direct people to shopping centers. Credit card utilization in these shopping centers, which offer entertainment and social activities in movies and restaurants as well as shopping opportunities for apparels and technology goods, encourage comfort and shopping at the same time. Shopping centers are meeting the shopping and entertainment needs of almost entire family in a secure way.”
  4 digits PIN brought comfort
  “chip-PIN project, which is a very suitable solution for the customers who don’t like to present their identity cards, allow comfortable shopping by only entering a single PIN.”
  Attraction of installments in shopping
  “Implementation of installment option for all products without any limit makes shopping more attractive. Furthermore, since credit cards began to be used as loyalty cards and they began to offer discounts, privileges and priorities when they are used in certain entities, more factors have occurred for making shopping more attractive.”
  The power of campaigns and advertisements
  “Consumers follow the campaigns, by which they are informed accurately. Utilization of the power of advertisement encourages the consumer for shopping. Banks that know the qualifications of their customers well use options, such as SMS, e-mail, etc. and always remind themselves.”
  Cash is kept
  “The recession in our economy is actually fed with credit card shopping. Installments and installment postponements enable consumers to keep their cash and benefit from the opportunities offered by credit cards.”
  
• Mehmet Koçarslan - Head of Reina Entertainment Group
  
  Mehmet Koçarslan, Chairman of Board of Directors of Reina, one of the most famous entertainment venues of Istanbul, says that dining and entertainment sector is one of those sectors, in which credit cards are used a lot and adds, “Our customers are encouraged by the banks to use their cards because there are many different campaigns and promotions for them. Competition between the banks has positive outcomes for us. Credit cards have a significant share in our sector. People can even eat their meals and entertain outside when they don’t have any money in their pockets and they are not required to limit their expenditures with what they have. The ratio of credit card utilization in our sector has reached to 95 percent. Most of the expenditures higher than 50 TL are paid by card. Even some bank cards are used to pay tips, but it is not very common. Therefore, I can say that cash is used for only very small amounts and tips. For us, less cash is better, because hundreds of people visit Reina everyday and 30 different guests ask for the bill at the same time. It is better to control this traffic with card. Reina is one of those places that used mobile POS for the first time. PIN and mobile POS are very useful for us. Having lots of cash around in crowded places like Reina creates security problems but now, thanks to PIN and mobile POS, this security problem is overcome. All transactions are performed in front of the customer. Meanwhile, my 15 years old daughter asked me to issue additional card for her, I said “we are giving you money, why do you need card” and she replied, “money can be lost but even my card is lost, I have the PIN”. As she said, cards are more secure than cash and they also allow the parents to monitor what their kids are spending.”
  
• Kaan Dönmez - General Manager of hepsiburada.com
  The security fear is overcome and the share of cards in total sales has reached 90 percent
  hepsiburada.com, one of the most popular e-commerce companies, is quite happy with the developments in this area. Kaan Dönmez, General Manager of hepsiburada.com, says that credit card shopping has reached to 90 percent of their total revenue and adds, “our purpose to star this business was to ensure easy access of consumers to goods and services and sell products at accurate prices.
  At the beginning, the consumers were worried about the security of credit card shopping but now today credit card is the most preferred method of payment in online shopping. Because credit cards offer installments and there are also various standards, implemented for Internet.
  We are audited in every 3 months by an audit company, authorized by Visa and MasterCard. However we prefer not to be audited quarterly but daily. So, we can detect any vulnerability that we might have. That’s how we made hepsiburada.com a secure shopping website.”
  
• Cenk Serdar - Assistant General Manager of Turkcell
  Card payment systems and mobile banking solutions
  What do you think about the developments in card payment systems as well as the technological developments (Internet, etc.)? How did the credit and debit card utilization affect your sector?
  Mobile devices, particularly mobile phones, are gaining different functions in parallel with the developments in communication and information technology. When they are supported with suitable infrastructure, any kind of data can be transferred with mobile phones. Payments and many banking transactions can be made by mobile phones today since multimedia applications and Internet access became standard functions for mobile phones. As Turkcell, our vision is to facilitate and enrich life with our communication and technology solutions. Thanks to the investments we made in innovation, our ecosystem, composed of our employees and partners, allow us to implement the newest products and services. We have also undersigned many pioneering projects in finance and banking.
  First of them is “Turkcell Mobile Signature”, which allows to perform transactions that legally need signatures through mobile phone. Cash withdrawal from ATMs thanks to additional security features of SIM card, One Time Password authentication for electronic transactions, using e-Municipality and e-Government services, etc. are pioneering projects throughout the world. Turkcell and Bankalararası Kart Merkezi (BKM) added more security and ease to online shopping to be made with credit card after their collaborative projects in banking and public transactions, thanks to “Turkcell Mobile Signature”. We are very happy to implement a pioneering project in the world by collaborating with BKM. Customers of Turkcell Mobile Signature are now able to shop online with their credit cards and Turkcell Mobile Signatures without any need to receive any other password.
  Another pioneer project of us in the field of finance is Turkcell Mobile Wallet. We have initiated “Turkcell Mobile Wallet” service, which allows the consumer to make payments securely by their mobile phones without using money or card at anytime and anywhere, we have led the way. Turkey is represented by Turkcell in World’s GSM Association (GSMA) in order for implementation of this project, which is expected to be the beginning of a new era in mobile payment and contactless banking. We will make contributions to the results of pilot project and assist in determining the standards, which will be applied for Mobile Payments throughout the world.
  
• Yılmaz Yılmaz - Chairman of Board of Directors of BMD
  Turkish Retail Sector and Credit Card Utilization
  Most important feature and advantage of Turkish retail sector is its capability to adapt to new environments. Turkish retail sector has managed to act in accordance with current conditions either during the recession or crisis days or when all sections of the economy are comfortable. .
  Campaigns for customers are also indicators of creativity and fast movement ability of Turkish retail sector.
  Instruments, such as debit and credit cards are very important in a sector that is dynamic, rapidly changing and developing, directly interacting with the customers, highly competitive, and adaptive to quick changing purchasing behaviors of customers, such as Turkish retail sector.
  Initially, credit card utilization is very important to keep the sector formal and transparent. The antidote of informal economy is credit card. You can record customers, companies and the sector thanks to credit cards.
  Credit cards are also important for consumers. A solid infrastructure is needed for an economy that consumes. Systems that are not focused on consumers are doomed to collapse. Therefore, the consumer’s debts must be proper and this can be done by debit and credit cards. Credit cards are preferred by consumers thanks to their facilitating features.
  Another important issue is the fact that globalization and multichannel strategies are now vital for retailers. Mobile commerce and social networks are playing a significant role in the future world of retail sector.
  At this point, the opportunities offered by debit and credit cards for consumers, mainly young people, by using mobile communication and social networks, make shopping fun and advantageous. Particularly the shopping ratio of students by using their debit cards is increasing.
  More than 150 member companies and their 500 brands of United Brands Association (BMD) owe more than 50% of their retail revenues, which amounted to more than 27 billion USD in 2010, to shopping with card. This ensures that our brands grow healthily, our revenues increase consistently and our data are traceable.
  Furthermore, consumer tendencies can be monitored, preferences of consumers can be replied as soon as possible, and targets and strategies of customer satisfaction programs can be planned easily thanks to card shopping.
  As it is seen, credit card utilization has many positive effects and United Brands Association is supporting conscious utilization of credit cards.
  
• Füsun Kuran - Chairwoman of TMD
  We support credit card utilization.
  Credit card utilization is the most important factor for the welfare and development of our country. The trust it creates during and after the consumption would be more indispensable in future both for the consumers and for our country. As Registered Brands Association, we support credit card utilization.