Turkey’s deposit insurance fund TMSF was last month appointed a trustee over local fintech Papara by court order, according to a statement from the country’s central bank.

Separately, the interior ministry said that it executed an operation targeting illegal betting and transfers of criminal proceeds allegedly conducted by Papara. The targeting extended to 13 suspects, including the company owners. All the suspects were detained.

Papara remains active as regards 65 electronic money institutions in Turkey, while the central bank is applying daily withdrawal limits in relation to the firm on a temporary basis.

According to its website, Papara had 21mn users. PPR Holding owns Papara. Karsli holds a 90% stake in PPR.

Spanish and Pakistani connections

Papara was launched in 2015 by Ahmet Faruk Karsli and Ilker Diker. 

In 2023, it completed the acquisition of Madrid-based neo-bank Rebellion Pay. Following the acquisition, Papara claimed that it had become Turkey’s first fintech unicorn.

So far, Turkey has seen the emergence of two decacorns, namely Alibaba’s e-commerce platform Trendyol and Getir, a rapid groceries delivery app-based service, along with five unicorns, namely Peak Games (acquired by Zynga (Nasdaq/ZNGA)), Dream Games, e-commerce platform Hepsiburada (Nasdaq/HEPS), artificial intelligence (AI)-based martech (marketing platform) Insider Growth Management Platform and Istanbul-based fintech Papara (launched in 2015).

In February 2024, media reports suggested that Papara acquired Pakistan-based fintech SadaPay.

In March 2024, Papara signed an agreement with Lebanon-based Bankmed Sal and Jordan's Arab Bank Plc (Amman/ABCO) to acquire their combined 100% stake in Turkey-based Turkland Bank (T-Bank).

Currently, the appointed trustee TMSF is directing all of these subsidiaries. Papara, meanwhile, remains a sponsor of leading football clubs in Turkey.

Business as usual

Since 2002, Turkey’s government has used deposit insurance fund TMSF as a tool for wealth transfer.

As of June 16, TMSF had established management over 801 companies. Additionally, it controlled stakes in 73 companies as well as the personal assets of 93 real persons as of end-2024.

One company is currently on sale.

In July 2024, Fatin Rustu Karakas, head of the TMSF, said that TMSF had seized 1,371 companies over links to the Gulenist clan since its alleged military coup attempt against the Erdogan administration on July 15, 2016.

The Imamoglu wave

In February, TMSF was appointed as a trustee over fast food chain Maydanoz Doner in relation to a prosecution aimed at Gulenists. This was the first company seizure to have taken place for a while.

In March, the Istanbul chief public prosecutor's office seized 23 companies owned by Erkan Kork as part of a prosecution aimed at illegal sports betting.

Bankpozitif, a lender, and TV channel Flash TV, along with fintech companies Payfix, Aypara (iPara) and Ininal were among the seized companies.

Also in March,  Imamoglu Insaat, owned by jailed Istanbul mayor Ekrem Imamoglu and his family, was seized via a court order issued at the request of the Istanbul chief prosecutor’s office.

Since then, more companies have been seized as part of the operation aimed at Imamoglu, President Recep Tayyip Erdogan’s chief political opponent, and more businessmen have been arrested.

Currently, in the new wave of company seizures that was launched with Maydanoz in February, seizures are executed via three arms, namely the Imamoglu operation, the illegal betting operation and the Gulenist operation.

Separately, municipalities are seized. Prior to February, when the Kurdistan Workers’ Party (PKK) and Turkey’s ruling regime announced a collaboration, municipalities were seized as part of the PKK operation. Since March, municipality seizures have been executed as part of the Imamoglu operation.

TMSF: biggest fintech operator in Turkey

The electronic money institution licence of Ininal has been temporarily frozen.

In November, the electronic money institution license of Erpa Odeme Hizmetleri was also temporarily halted. However, no information was provided on the reasoning behind the move.

Local media reports quote anonymous witnesses at local courts as saying that Erpa was among local fintechs that served illegal betting schemes along with Maldopay, CMT Cuzdan, Envoysoft, Mefete, Erpa Pay and Ozanpay.

The payment institution licence of Aypara Odeme remains active while the licence of PayFix has been temporarily blocked.

Currently, the TMSF is the dominant player in Turkey’s fintech industry with its two active units in addition to the two units that remain suspended.