Is MCA legal in Turkey?

June 20, 2019

While ignoring our pleas for transparency, Wirecard has confirmed to industry participants that Brazil and Turkey represented 33% of MCA balances as of March 31st, despite their recent comments during this quarter that they were 50%. This would mean Brazil and Turkey represented €133M of the €400M at quarter end.

Curiously, Wirecard has never mentioned MCA in Turkey in a published document.

Our original analysis on Brazil estimates MCA at €19M, and we think, in a most extreme example, it could be as high as €63M. This implies Turkey takes up the lion’s share of the €133M of MCA that Wirecard has confirmed, meaning Turkey MCA ranges from €70M-€115M:

However merchant cash advance in Turkey is illegal under Law 6493 for non-bank payment service providers.

 €M (unless stated)
Brazil and Turkey as %33%
Brazil and Turkey MCA133
Our Brazil MCA estimate19
Implied Turkey MCA115
Maximum possible Brazil MCA63
Implied Turkey MCA70
Range for Turkey MCA70–115

We have commissioned an independent legal opinion to corroborate this point. Our Turkish law firm found the following:

“…it is not legally possible for e-money or payment institutions to provide a service like “Merchant Cash Advance” in Turkey. Such a case would be a clear violation of the regulations and therefore those offering this service are to be subjected to heavy administrative and criminal sanctions.”

Please find the full legal opinion here for further reading.

We note the irony that our law firm is called Bafin Consultancy.

To summarize: in June 2013 Turkey published Law 6493 regulating and issuing licenses for electronic money institutions. This law came into force in June 2015, and in November 2016 Wirecard Turkey received an e-money license. – (Source: 3Q16 WDI interim statement)

This is the only regulatory license that Wirecard owns in Turkey, and importantly they do not hold a banking license in Turkey.

The law is clear: electronic money institutions may not grant credit, and may not issue electronic money prior to the receipt of funds.

Is this the reason that a Wirecard quarterly report has never mentioned MCA in Turkey? We are preparing a submission for the Turkish banking regulator with these findings.

To clarify further - this presentation from the World Bank summarises the key rulings from Law 6493. It is clear about the prohibition of granting loans:


However, this illegality somewhat overshadows our view that Wirecard Turkey is not lending as much as €70M, or any amount close to this, to their merchant customers given the size and scope of Wirecard Turkey.

In August on the 2Q18 analyst call, the Wirecard CEO said:

“I can just say, Turkey is for us a quite insignificant market, I would say it's on EBITDA, probably, under 1%”

If Turkey EBITDA was 1% of total in 2018, €6M (of €578M), taking group EBITDA margin of 29% gives revenues of €20m for 2018, or €5M per quarter:

 €M (unless stated)   
Take rate5%B  
TPV400C= (A / B) 
Monthly TPV33D= (C / 12) 
Credit as %59%E Source
MCA uptake50%F  
MCA estimate10G= (D x E x F) 
Brazil and Turkey MCA133   
Brazil estimate19   
Turkey estimate10   
Missing cash(105)   

Our research on the ground in Turkey actually shows the business is substantially smaller than the figures discussed above. The CEO’s "under 1 percent of EBITDA" is actually lossmaking on far smaller revenues.

As ever with Wirecard, more questions arise.

  • How large are the revenues in Turkey, how big is MCA, and is it legal?
  • Does Softbank intend to fund illegal lending in Turkey?
  • Where is the missing €105M if not in Brazil or Turkey?
  • How big is MCA in Asia?
  • How big is MCA in Europe?

This website, its contents and the materials on or accessible through this website (such materials, this website and its contents being the “Materials”) are for informational purposes only and may not be relied on by any person for any purpose. Under no circumstances should any Materials be construed as, investment, financial, legal, tax or other advice or recommendations. The Materials are not intended to be and do not constitute or contain any investment recommendation or any financial product advice under any applicable law or regulation. No information in any of the Materials should be construed as recommending or suggesting an investment strategy or as representing any opinion as to the present or future value of any financial instrument. Investors should seek their own financial, legal and tax advice in respect of any decision regarding Wirecard AG (“Wirecard”). We do not render investment advice to anyone unless we have an investment adviser-client relationship with that person evidenced in writing. You understand and agree that we do not have any investment advisory relationship with you or do not owe fiduciary duties to you. Giving investment advice requires knowledge of your financial situation, investment objectives, and risk tolerance, and we have no such knowledge about you.

By downloading from, or viewing Materials on this website, you agree that use of the content on this website is at your own risk.

Funds and clients managed by us are in the business of trading securities. As of the publication date of the Materials, funds or clients related to us and/or their clients and/or investors (possibly through or along with our partners, affiliates, employees and consultants) have a short position in one or more of the securities of Wirecard (whether they be in stock, contracts for differences, options, swaps, futures or other synthetic instruments and other derivatives related to one or more of these securities). Therefore such funds or clients related to us and/or their clients and/or investors stand to realize significant gains in the event that the prices of either equity or debt securities of Wirecard decline and, on the other hand, may incur losses in the event the prices increase. For this reason, there might be a conflict of interest. We will not update any Materials on our website to reflect changes in positions that may be held by funds and/or investors related to us.

It is possible that there will be developments in the future that cause one or more of such funds or clients from time to time to sell all or a portion of their holdings in open market transactions or otherwise, buy shares (in open market or privately negotiated transactions or otherwise), or trade in options, puts, calls or other derivative instruments relating to such shares, and funds and clients managed by us may currently have such positions whether long, neutral or short. Consequently, short positions or (beneficial) ownership of Wirecard shares (long position) by funds and clients managed by us may vary over time depending on various factors, with or without regard to our views of Wirecard's business, prospects or valuation (including the market price of Wirecard shares), including without limitation, other investment opportunities available to us and funds and clients managed by it, concentration of positions in the portfolios managed by us, conditions in the securities markets and general economic and industry conditions.

The views, forward-looking statements, estimates, projections, assessments and beliefs expressed in the Materials represent the opinions of the authors thereof (“we”, “us” or “our” as the context requires) and are based on publicly available information with respect to Wirecard. We recognize that there may be confidential information in the possession of Wirecard that could lead Wirecard to disagree with our conclusions.

Certain (financial) information and data used in the Materials have been derived or obtained from public filings made by Wirecard and from other generally available and free accessible third party reports and sources. We have not sought or obtained consent from any third party to use any statements or information indicated herein as having been obtained or derived from generally available statements made or published by third parties. Any such statements or information should not be viewed as indicating the support of such third party for the views expressed in the Materials. No warranty or representation, whether express or implied, is made by the inclusion of any data or information, whether derived or obtained from public filings made by Wirecard or from any third party, that such data or information is accurate, complete or comprehensive.

The Materials may include content or quotes from, or hyperlinks to, news coverage or other third party source. The content of such third party materials has not been independently verified by us and does not necessarily represent our views. The authors and/or publishers of such third party materials are independent of, and may have different views to, us. The Materials may not be representative of all relevant news coverage or views expressed by other third parties on the stated issues. Neither we nor any of our affiliates shall be responsible or have any liability for any misinformation contained in any Wirecard filing or third party report.

Nothing in the Materials is intended to be a prediction of the future trading price or market value of securities of Wirecard. There is no assurance or guarantee with respect to the prices at which any securities of Wirecard will trade, and such securities may not trade at prices that may be implied herein. The Materials do not recommend the purchase or sale of any security.

We reserve the right to change any of our opinions expressed in the Materials at any time as it deems appropriate. We disclaim any obligation to update the data, information or opinions contained in the Materials.

Under no circumstances are the Materials intended to be, nor should it be construed as, an offer to sell or a solicitation of an offer to buy any security. We are not offering, selling or buying any security to or from any person through this website or Materials on this website.

We also reserve the right to take any actions with respect to investments in Wirecard as we may deem appropriate, including, but not limited to, communicating with management of Wirecard, other investors and shareholders, stakeholders, industry participants, and/or interested or relevant parties about Wirecard, and to change our intentions with respect to our investments in Wirecard at any time.