Paying a supplier in Turkey: how to do it and what to prepare

Turkey remains one of Russia’s major trading partners. Textiles, food, building materials, equipment and components come from there, and services and transportation are ordered there too. At the same time, paying a Turkish supplier has become harder in recent years: Turkish banks look more closely at money from Russia and ask questions more often.

What has changed on the Turkish side

Turkish banks do not prohibit payments from Russia, but they classify them as higher-risk transactions. The reason is not Turkish law but fear of secondary sanctions: the bank needs to keep its correspondent accounts in dollars and euros and will not risk them for a single payment. In practice, this means:

• the beneficiary’s bank may ask the supplier for the contract, the invoice and explanations;
• large incoming payments take longer to check;
• some banks have restricted Russia-related payments and return them;
• an inaccurate payment purpose becomes a reason for delay.

It helps if the supplier warns its bank about the payment in advance and prepares the deal documents. This speeds up crediting.

Which currency to pay in

Turkey’s national currency is the lira (TRY). Because of the lira’s strong fluctuations, many Turkish exporters invoice in US dollars or euros. You have to pay in the currency of the contract and the invoice.

If the invoice is in lira, factor in the exchange rate risk: the lira rate may shift noticeably between signing the contract and paying. If it is in dollars or euros, the route matters: such payments pass through correspondent banks, and there are more links in the chain.

Turkish suppliers often work on full or partial prepayment before shipment. Each such payment must refer to its own invoice: one for the advance and one for the balance. If there is a single invoice for the full amount, state in the payment purpose which part you are paying.

Payment methods

A direct transfer from a Russian bank

This works if your bank sends payments to Turkey and the supplier’s bank accepts them. The range of such banks is limited and keeps changing. A refusal may come at any stage, including after the money has been debited.

An account at a Turkish bank

Opening one is not easy: the bank checks the company and its owners and may require a personal visit or a notarized power of attorney. A Russian resident must notify the Russian tax authority that it has opened an account abroad and report on the movement of funds. This option is justified with a steady, large turnover in Turkey.

Money transfer systems

They are designed for individuals and small amounts. They are not suitable for a company paying under a foreign trade contract: the limits are low, and there will be no documents for currency control.

An agent under an agency agreement

You pay in roubles in Russia, and the agent sends foreign currency to the supplier from its foreign company. The supplier receives an ordinary bank payment against the invoice. You receive documents for your accounting and currency control.

If the beneficiary’s bank accepts money only from a specific payer, the agent may engage a sub-agent. With us, this is possible only with your consent.

Bank details and payment purpose

A Turkish account has an IBAN: it starts with the letters TR and has 26 characters. An error in a single character leads to a return. Check the IBAN against the contract and confirm it with the supplier through a second channel: by phone or by email from an address you already know. Fraudsters often send “new bank details” in the supplier’s name.

Besides the IBAN, you need the beneficiary company’s name exactly as in its registration documents, the bank name and the SWIFT code. Pay attention to the legal form in the name: A.Ş. (joint-stock company) or Ltd. Şti. (limited liability company). It is also written in full, as in the contract.

In payment messages, the Turkish letters ç, ş, ğ, ı, ö, ü are usually replaced with the plain Latin c, s, g, i, o, u. Ask the supplier to send the name as the bank sees it, and use the same spelling in all documents.

The payment purpose must refer to the contract number and date, the invoice number and the goods. The bank may not accept wording like “payment for goods” without numbers.

Documents

A standard set is usually enough for the payment:

• the contract with the Turkish supplier;
• an invoice with the amount, currency and payment purpose;
• a specification, if the contract is a framework contract;
• the beneficiary’s bank details;
• for paying for transportation: the carriage or freight forwarding agreement and the carrier’s invoice.

Transportation from Turkey is often paid separately from the goods, to a Turkish or another carrier. This is a separate payment with its own documents; more on the “Freight payments” page.

If the contract amount exceeds the threshold set by Bank of Russia Instruction No. 181-I, the contract is registered with your bank. This is the importer’s obligation whatever the payment method, including payment through an agent.

Business days and holidays

Crediting times depend on business days in both countries. In Turkey, banks are closed on weekends and public holidays. Two religious holidays, Ramazan Bayramı (Eid al-Fitr) and Kurban Bayramı (Eid al-Adha), shift in the calendar every year and last several days in a row. If the payment is urgent, check the calendar in advance and send the roubles ahead of the holidays, not on the eve of them.

How a payment to Turkey goes through the VEDmost network

For a payment to Turkey, we select an agent from our pool with a working route to your supplier’s bank. Before the roubles are debited, the terms are fixed: the execution term in the agency agreement, the rate and fee in the payment order. We check the bank details, the beneficiary’s name and the payment purpose before you sign the agency agreement. On request, the payment goes through a special escrow account at a Russian bank: the roubles are released only after the foreign currency has gone to the supplier. This scheme carries an additional fee. The broker’s fee is paid by the agent; you don’t pay us separately.

More about this destination on the “Invoice payments to Turkey” page. If you are paying for goods under a foreign trade contract, see the “Import payments” page.