Suspension of Card Services in Russia
Due to US sanctions imposed on Moscow as a result of the ongoing crisis in Ukraine, American card network operators Mastercard, Visa, and American Express have suspended their services in Russia.
- Any cards that have been issued globally by banks on these networks will not work in Russia at point-of-sale terminals or ATMs as a result of the suspension. Also, cards issued that have been issued by Russian banks on these networks will no longer work outside of Russia.
- The decision came after a request by Ukraine’s President Volodymyr Zelensky, and it threatens to further isolate Russia’s economy, which is already suffering from corporate boycotts and financial sanctions.
Alternatives that can be used by Russia
Following similar US restrictions in 2014, in which card networks such as Mastercard and Visa refused to provide services to Russian banks, Moscow established its own payments system, Mir, and it was launched in 2015. According to Russia’s central bank, many banks plan to issue cards using China’s UnionPay, a payment system that is available in 180 countries.
Impact of the bans
While these sanctions have been downplayed by Russian banks, claiming that customers will be allowed to use Mastercard and Visa cards until they expire, the networks have stated that cards that have been issued abroad won’t work in Russia. Globally, with the exception of China, Mastercard and Visa dominate around 90% of debit and credit card payments.
Effect of the suspension
Russians rushed to withdraw cash from the country’s banks, fearing that Visa and Mastercard payment card services will stop working as a result of the sanctions. Long lines formed at ATMs and some Western experts have expressed concern over Russia’s banking system’s liquidity.
Category: International / World Current Affairs