Joining the long list of companies that have ceased operations in Russia, international financial service providers Visa and Mastercard announced Saturday (March 5) that they would quit the Russian market.
International financial services providers Visa and Mastercard Saturday (March 5) announced that they would quit the Russian market and not provide services in the country. Both joined the long list of US-based companies that boycotted the Russian market over its military operation in Ukraine.
In a major shift in its financial ecosystem, Russian banks will now issue cards based on the Chinese UnionPay payment system.
UnionPay, a Chinese international payment system, was founded in 2002 and received international status in 2005. It has operations in more than 180 countries in the world.
Earlier, US-based payment giant PayPal had announced it would cease operations in Russia.
Many Russian banks, including its biggest lender Sberbank, as well as Alfa Bank and Tinkoff, announced a switch to UnionPay in a move to counter the announcements by Visa and Mastercard. Some Russian banks, like Pochta Bank, Gazprombank, Promsvyazbank, Sovcombank and several other small banks, are already using the Chinese UnionPay system to process payments.
As a precautionary measure, the Russian Central bank advised Russians currently abroad to keep cash to avoid the problem of payment in foreign lands.
Russia’s own payment processing system, MIR announced that Visa and Mastercard holders would not face any problems in domestic transactions as domestic transactions will be taken care of by MIR. Once the already issued Visa & Mastercard expires, customers will have the option to shift to domestic cards.
The MIR said in a statement, “All cards of these payment systems already issued by Russian banks will continue to work within our country as before…Until the expiration of their validity, Visa and Mastercard cardholders have access to all the funds on their accounts, as well as all the usual payment transactions – paying for purchases, transferring funds from card to card, withdrawing cash, etc.”
After the West imposed economic sanctions on Russia and blocked it from using SWIFT, the secure message system used by banks for cross-border payments, the fear is rising that Russia will now invest more in its domestic equivalent SPFS system.
