January 17, 2020 / 9:09 AM / a month ago

Turkish credit card payments' cap could hit travel sales - travel agents

* Credit card instalments cut to three for spending abroad

* Turks spent $3.4 billion on trips abroad in Jan-Sept

* Northern Cyprus seen particularly hit

By Ceyda Caglayan

ISTANBUL, Jan 17(Reuters) - Turkish travel agencies’ international sales could fall after the country’s banking watchdog halved the maximum number of instalments for repayment of credit card spending abroad, sector representatives and agents said.

The Turkish BDDK watchdog this week reduced the instalment period for payments on international trips, airline tickets and accommodation abroad to a maximum three months from six.

“This regulation will harm travel agencies by decreasing demand for trips abroad and also in the long term it might harm the Turkish economy as well,” said Cem Polatoglu, chief executive of travel agency Tur Andiamo.

The BDDK did not say why the number of instalments had been reduced, but Polatoglu said the authorities appeared to believe that if it becomes harder for people to go abroad, foreign currency will stay in Turkey.

Some 7.4 million Turks spent around $3.4 billion on trips abroad in the first nine months of 2019, according to tourism ministry data.

“Companies with a strong financial structure have the strength to find alternative solutions but small agencies... will have problems with sales,” said Firuz Baglikaya, head of the Association of Turkish Travel Agencies (TURSAB).

Baglikaya said credit card payments account for more than 75% of all international trip sales and 80% of Turkish travellers used a payment plan exceeding three monthly instalments.

“We initially expect a fall of some 15-20% in international trip sales due to this decision,” he said.

ALTERNATIVE SOLUTION

Travel agencies could offer holiday loans through banks, deals to extend payment periods or make some price cuts to offset the impact, agents said.

“Half of our sales are done with more than three month instalments. Travellers choose to book in the December-February period to benefit from early booking promotions,” Prontotour Chairman Ali Onaran said.

“Early booking sales will be impacted by this change in instalments,” Onaran said.

Kudret Ozersay, foreign minister of Northern Cyprus, a breakaway state recognised only by Turkey, said on Twitter that Turkish Cypriot officials had contacted Ankara regarding the possible negative impact of the decision.

Onaran said the Northern Cypriot tourism sector would be severely impacted by the cap on instalments as Turks make up some 80% of its total visitors. (Additional reporting by Michele Kambas; Writing by Ezgi Erkoyun; Editing by Daren Butler)

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