The noose is tightening a little more on the Russian financial system. The two American payment giants Visa and Mastercard announced on Saturday that they would suspend their operations in Russia following the Russian invasion of Ukraine. The next day, their compatriot American Express decided to follow suit, adding Belarus to its list.
The cards of the three companies issued abroad can no longer be used to make purchases in the country, both physically and on the Internet. These will no longer work at ATMs or merchants. As for holders of Russian cards, they will no longer be able to use them outside of Russia from March 10. “All transactions made with Visa cards issued in Russia will no longer work outside the country,” Visa said in a statement.
The three American giants are thus taking an additional step to sanction Russia, after having stopped, last week, their bank card operations linked to Russian banks under international sanctions.
“We are compelled to act in the wake of Russia’s unprovoked invasion of Ukraine, and the unacceptable events we have witnessed,” Visa’s chief executive Al Kelly said in a statement. Mastercard, which has been operating for more than twenty-five years in Russia, justified these measures by referring to “the unprecedented nature of the current conflict” as well as an uncertain economic environment.
A large share of the country’s transactions
Mastercard added that it would resume operations “when appropriate, and if permitted by law.” The moves came hours after Ukrainian President Volodymyr Zelensky called on the companies to cease all activity in Russia during a video call with the US Senate.
Russia accounts for about 4% of Visa and Mastercard’s net revenue, or just over $1 billion each. By contrast, their cards accounted for 74% of payment transactions in the country in 2020, according to the Nilson Report, a specialist payments publication. Enough to further increase the queues in front of the ATMs that formed last week in Moscow and elsewhere in Russia.
Russian banks fall back on MIR and UnionPay
Faced with the decision of American players, Russian banks were quick to react. Bank cards issued by Russian institutions will continue to work in Russia using Russia’s MIR payment system, Sberbank said, saying it would specify timelines later. The country’s largest bank also said it is studying the possibility of issuing cards using China’s UnionPay system.
This measure could allow Russians to make payments abroad, UnionPay being present in 180 countries and regions. Same statements on the side of Alfa-Bank and Tinkoff, two other Russian establishments. Alpha Bank is already working on bank cards that work with UnionPay and Tinkoff has announced that it will do so as soon as possible. The Russian branch of Austrian Raiffeisen also said on its website that it is studying the matter.
In the meantime, Russia’s central bank has advised its citizens to use cash abroad. It also declined the list of countries in which MIR cards could be used. Russian citizens will therefore be able to use their cards in Turkey, Vietnam, Armenia, Belarus (except for American Express), Kazakhstan, Kyrgyzstan, Tajikistan and the separatist territories of South Ossetia and Abkhazia.