PayU SA T: +48 61 630 60 05

ul. Marceli!ska 90 F: +48 61 630 60 04

60-324 Pozna! E: info@payu.pl


Company registered by the District Court of Pozna! - Nowe Miasto i Wilda in Pozna!, 8th Commercial Division of the National Court
Register under inscription no. 0000274399. Tax Id Number (NIP): 779-23-08- 495, Statistical no. (REGON) 300523444. Share capital:
4.000.000 PLN, paid i-n full.

Turkish E-Commerce and Online Payments Market

An interview with PayU Turkey Country Director, Y. Emre Gzer, by Emir Aksoy (*)
PayU Turkey Country Manager, Y. Emre Gzer, was eticaretmag.coms guest last year on
2012/2013 file. This time he shares his views on the industry itself -the future of payment
systems, his 2014 predictions and expectations, as well as the companys business targets.
In the last years interview, Gzer told us that they managed to increase the number of
contracted merchants up to 3.000 in 2013, while they had an expectation of 1.000 in the first
place. PayU Turkeys plan is to lift this number in 2014 up to 4.000.
In line with the increasing interest in e-commerce, Y. Emre Gzer believes that Turkey will be
able to demonstrate its potential in online payment systems in the next few years and credit
card-oriented system will re-optimize itself to the best advantage of consumer and industry
demands, instead of a short-term brand new solution that breaks the routines and consuming
habits.

What type of changes has Turkish e-commerce industry gone through in 2013 when
compared to 2012? How big is the industry now?
It seems that online payments will grow by 30% next year. However, if we consider the e-
commerce turnovers in general terms, it is obvious that the industry growth will actually be
below this number. We rightly expected 2013 to be a year of consolidation a year ago and then
witnessed some of the companies do down due to failure in profitability and lack of long-terms
strategies. Whats more, as I previously foretold long ago, we observed some of the vertical e-
commerce sites making minor changes in their business models and transferring them into
horizontal e-commerce approaches.
Obviously, the industry has not grown mature enough to support quite a lot of vertical players
yet. Thats why 2014 will be a year where companies will need to focus on profitability instead
of high turnover.

In view of online payment systems, what types of developments have we witnessed
globally and in Turkey in 2013? Whats your view on alternative payment systems?
Turkey is far more developed in payment systems infrastructures than many other countries.
Considering this great deal of know-how, the operating logic taking better shape every day and
the security measures we have, Turkeys high-technology alternative payment background is
PayU SA T: +48 61 630 60 05
ul. Marceli!ska 90 F: +48 61 630 60 04
60-324 Pozna! E: info@payu.pl


Company registered by the District Court of Pozna! - Nowe Miasto i Wilda in Pozna!, 8th Commercial Division of the National Court
Register under inscription no. 0000274399. Tax Id Number (NIP): 779-23-08- 495, Statistical no. (REGON) 300523444. Share capital:
4.000.000 PLN, paid i-n full.

far better than many other countries in the world. Among these actors in high-technology
payment systems, we can simply mention BKM with its BKM Express technology and TV
advertisements that boost dynamism in the industry by encouraging consumers to securely
shop online. And now, in line with our recent cooperation with BKM, it is our turn to integrate
BKM Express into PayU and provide our contracted merchants with better technologies.
The countries that have the best alternative payment channels are the ones e-commerce
boosted in recent years, such as UK, Germany, France, USA and Australia. In other countries,
the share that alternative payment systems have in the whole ecosystem is not even a two-
digit figure. However, the use of mobile devices will trigger alternative payment systems and
strengthen its presence in the market in the near future. At this point, its more important to
create an added value.

How about PayUs latest business targets? Have you been able to carry out your
2013 plans? Can you share some figures with us?
2013 has been very productive for PayU. For now, we are working with more than 3 thousand
contracted merchants, which is far more than we targeted for last year. It also seems that we
will manage to realize our target in total volume of trade, since the fiscal year ends in March
for PayU. Thats why we can say, for now, that we seem to be on the right track in succeeding
our targets.
Today we reach every single e-commerce entity in Turkey, from air transportation to private
shopping clubs, simply everyone from tourism to marketplaces. In Turkey, we operate in every
category that VISA and MasterCard permits. Markafoni, Tatilsepeti, Media Markt, Kitapyurdu,
Estee Lauder companies, Webdenal and Ucuzu.com are amongst the businesses we actively
work with. Soon we will share other leading companies that we are in contact with about
possible cooperations.
In 2013, PayU has many solid initiatives that aimed to support the Turkish e-commerce
market. As the business partner of e-commerce companies, PayU combined all its value added
services into one platform called PayU Bridge, addressing primarily those contracted
merchants that try to maintain their e-commerce activities through virtual POS solutions
acquired from different banks. The ease of single integration, payment security, single
management panel and single formatted reconciliation file facilitate our contracted merchants
to focus their own work and increase their sales.
As PayU, we want to meet all the business requirements of our contracted merchants in
regards to payment systems with the global experience we have in 16 countries. To that end,
PayU SA T: +48 61 630 60 05
ul. Marceli!ska 90 F: +48 61 630 60 04
60-324 Pozna! E: info@payu.pl


Company registered by the District Court of Pozna! - Nowe Miasto i Wilda in Pozna!, 8th Commercial Division of the National Court
Register under inscription no. 0000274399. Tax Id Number (NIP): 779-23-08- 495, Statistical no. (REGON) 300523444. Share capital:
4.000.000 PLN, paid i-n full.

we will soon give our contracted merchants the opportunity to integrate BKM Express on their
websites in order to enhance their services.
In order for our contracted merchants to enlarge their businesses, we continue to support
them in many other ways. For this purpose, together with Google, we organize the annual
Success at E-Commerce Seminar. Furthermore, last year, we shared promotional fare offers
from companies and corporations like Istanbul Business School, eOfis, Zanox and Zendesk
where we get really positive feedbacks from. In 2014, well have similar initiatives like this and
continue to provide our contracted merchants with many offers that will facilitate their own
work.
This year, we are planning to enhance our relationships and strategic cooperations with various
organizations, which support digital world, like Galata Business Angels (Galata !" Melekleri -
GBA), Endeavor Turkey, Istanbul Chamber of Commerce IT and E-commerce Branch and
university clubs.

How about PayUs 2014 targets? Any focus on SMEs or just large scale companies?
In 2014, we are planning to work with 4.000 contracted merchants and transfer 15% of
Turkish e-commerce trade volume over PayU by developing our relationships specifically with
middle and large scale companies.

What will be the most popular topic of Turkish e-commerce in 2014? What to expect
from 2014?
Regarding Turkey, we will witness similar trends that we see in USA and Europe in Turkey.
When we think of mobile, we can observe that it affects traditional retail the most and that
digital elements like location based applications influence the industry more and more every
day. Soon well step into a world where mobile shopping will increase, social e-commerce will
be triggered by mobile and thus big retail companies will implement multi-channel strategies
to integrate the physical and the online together. In the next few years, Turkey will be able to
show its potential in the industry and in line with e-commerce growth, online payment systems
will be a part of a greater ecosystem.
In view of online payment systems, we can see that it has become an industry that is growing
day by day and stimulating e-commerce activities through security advantages and ease of
use. Now it is a competitive arena where the number of players is increasing slowly but
steadily.
PayU SA T: +48 61 630 60 05
ul. Marceli!ska 90 F: +48 61 630 60 04
60-324 Pozna! E: info@payu.pl


Company registered by the District Court of Pozna! - Nowe Miasto i Wilda in Pozna!, 8th Commercial Division of the National Court
Register under inscription no. 0000274399. Tax Id Number (NIP): 779-23-08- 495, Statistical no. (REGON) 300523444. Share capital:
4.000.000 PLN, paid i-n full.

Turkish e-commerce turnover is now 5-6 billion Turkish liras. In line with this result and all
those aforementioned improvements in the industry, we expect new regulations in payment
systems, which will help e-commerce players in the field to grow more steadily. Although we
reckon that new and different payment systems will present themselves in the market, we also
dont think that theyll be able to change Turkish consumers habits and the market structure
that has been shaped long time ago by credit cards. Instead, in my opinion, credit card-
oriented system will be optimized.

What is the most important step a startup should take in choosing a proper payment
system before deciding on activating an e-commerce website?
I believe that thorough examination of the companys technical infrastructure, its global
partnering group and the permissions it received from the licensing institutions is at utmost
importance before deciding on which payment system to choose.
Thanks to high-technology, more complicated fraud systems take over the virtual world every
day. This not only increases the share of card-not-present fraud figures in total fraud
estimates, but also the number of contracted merchants that fall victim to fraud, even the
long-standing, corporate companies that had never been exposed to such scam.
Thats why, almost all e-commerce companies, especially the large scale ones, need software
support and professional anti-fraud filters, along with anti-fraud teams in order to minimize the
risk. Companies that provide all these services in one platform, like PayU, can help institutions
to manage their payment infrastructure security systems and focus their own business.
Startups can minimize the potential risks by working with globally acknowledged actors in the
payment systems industry.

* This interview was published in Turkeys leading e-commerce blog E-ticaret Mag
in December, 2013.