EUROPE. European tourism markets will miss out on more than €1.6 billion of spending from visitors due to tax refunds being paid digitally rather than in cash, according to research by Prosegur ChangeGroup.
The foreign exchange services group noted that more than 40 countries, including India, China, Brazil, Malaysia and South Africa, have what it termed a ‘restricted currency’. This means that tourists are limited in how they can spend their money abroad and what they can bring home, including the tax refund they receive for shopping.
The research conducted by Prosegur ChangeGroup also found that 90% of tourists would prefer to receive tax refunds in cash instead of digital methods so they can spend it on further travels abroad. The problem, said the company, is that if they receive their tax-free refund on their credit card, it is received in their home currency, making it more difficult to spend it in Europe.
Prosegur ChangeGroup CEO Sacha Zackariya said the switch digital will have a big impact on the UK and European retail and hospitality markets.
For example, in the UK, 1.72 million tourists visited from countries with restricted currencies in 2019. With the average shopping spend around £770, that means about £1.3 billion was spent by tourists in the UK and £265 million worth of VAT paid, much of it eligible for refund.
If most refunds were made in UK Pounds, those visitors would be more likely to spend that money in the UK on such things as culture, hospitality and retail, he said. This would be similar in Germany, France, Italy, and Spain if refunds were made in Euro banknotes instead of a digital refund in their local, restricted currency (paid only after they had returned home).
Zackariya said: “Whilst technology and digital payments have enhanced the shopping experience for many, in this case, it is turning off the tap to tourists from more than 40 countries. Because it is becoming the norm for digital systems to manage tax refunds, tourists and the tourism trade are missing out. It is clear from the research we have done and what we evidence every day through our international currency exchange stores, that tourists prefer the cash in their pocket.”
He added: “Now is the time for European governments and the tourism industry to wake up and make a change that could drive further growth in our tourism and hospitality industries, as they continue to recover from the pandemic. Cash remains king for many people.”
Zackariya has also been a leading figure in the campaign in the UK to enable tax free shopping and is the author of Leading Travel and Tourism Retail, a book about how businesses can capture spend from shopping tourism. ✈
