Retailers worried about possible curbs on credit card spending

ISTANBUL

Retailer organizations have voiced concern that their businesses would be hugely affected if some harsh measures are introduced to curb credit card spending.

At the launch of the inflation report earlier this month, Central Bank Governor Fatih Karahan said that the authorities are closely watching the spike in credit card spending and that they were working on this. Karahan, however, did not provide other details as to what kind of steps could be taken on credit cards.

Karahan’s comments led to speculations that authorities may introduce some restrictions.

Retailers’ sales will definitely decline if the number of installments in credit card payments is reduced, said Nuri Şapkacı, the president of the Council of Shopping Centers (AYD).

Echoing Şapkacı, Sinan Öncel, the chair of the United Brands’ Association (BMF), stressed that low-income groups rely on credit cards to buy their urgent needs.

“In the environment of high inflation, payment with installments provides some respite to consumers. Restrictions on credit card spending in installments, if introduced, will hurt both consumers and retailers,” said Öncel.

Unit sales in the retail sector were weaker in January compared to the previous month, according to Öncel.

“Both unit sales and revenues of two-third of retailers declined last month from December. What determines the performance of the retail industry this year will be the purchasing power of local consumers and sales to foreign shoppers,” Öncel said.

If the contraction in sales observed in January continues, this will be a difficult year for retailers, he added.

According to the latest data from the Interbank Card Center (BKM), credit card spending soared 124 percent in December 2023 from a year ago to 818.2 billion Turkish Liras ($26.3 billion).

The number of credit cards in the country rose 18 percent to 118 million.