Turkey’s banking watchdog has stopped allowing credit card payments in installments for foreign travel, such as flights, travel agency fees and accommodation, in a step seen dealing a blow to foreign travel operators, Reuters reported.
The move, which hit airline shares and was seen as curbing foreign currency outflows, was one of two measures announced by the Banking Regulation and Supervision Agency (BDDK) late on Monday, which it said were among coordinated steps to strengthen financial stability.
Tourism operators say they have been hit in recent years by a cost-of-living crisis and weakness of the lira, which has lost half its value against the dollar since end-2021, with travelers commonly using credit cards to finance trips.
“Almost all my clients were paying in installments,” Cem Polatoğlu, spokesman of a tour operators’ platform, was quoted by Reuters as saying. Polatoğlu noted that an average trip for two persons costs around 50,000 lira ($1,850). “The number of people who can pay this amount in one go is very few.”
“The logic [of the step] is ‘citizens shouldn’t go abroad and spend foreign currency,” he was quoted by Reuters as saying. Polatoğlu added that the foreign travel sector was also being hit by increasing difficulties faced by Turks in securing tourist visas.
Polatoğlu forecast a sharp fall in the numbers traveling overseas after a surge in spending by Turkish citizens abroad in the first half of the year to $3.17 billion — an 84 percent increase from the same period in 2022 — with such spending facilitated by credit card outlays.
The credit card move also had an impact on airline share prices, with Turkish Airlines dipping 1.3 percent and Pegasus Airline dropping 2.3 percent. İstanbul’s main BIST-100 index was 0.4 percent lower.
The BDDK also said in a statement late on Monday that it had decided to increase the risk weightings taken into account in calculating capital adequacy standard ratios for consumer loans, personal credit cards and vehicle loans.
Turkish authorities have recently taken steps aimed at reining in chronic high inflation and reducing domestic demand, with the central bank hiking interest rates by 900 basis points in two months alongside other tightening measures.