Visa and Mastercard’s decision to cut links with Russia has seen Russian banks turn to China’s UnionPay for assistance.
Several Russian banks are looking to start issuing cards using UnionPay, a popular Chinese card operator platform. The Russian financial institutions will use UnionPay with Mir network as part of the new payment processing system.
Russia’s decision to take this recourse comes after Western-based payment processors Visa (NYSE: V) and Mastercard (NYSE: MA), suspended all activities in Russia. The suspensions are additions to financial sanctions hitting the Eastern European country for its unprovoked invasion of Ukraine on February 24th.
UnionPay & Russian Mir Offer Some Operational Coverage to Russian Banks
With UnionPay’s resources, Russians will be able to make some payments overseas to as many as 180 countries and regions. Russians must begin using UnionPay as the Visa and Mastercard withdrawal begins on March 10th. As a result, Russia’s central bank advises citizens to withdraw cash from ATMs before the ban comes into play. Furthermore, the country’s governing bank also advised Russian citizens to use cash abroad.
According to Russia’s central bank, the overseas ban also applies to local subsidiaries of foreign banks. The announcement regarding the UnionPay switch came on Sunday from Russia’s biggest lender Sberbank, as well as Alfa Bank and Tinkoff.
Russia’s Mir network has functionality that extends to some other regions outside of the country. In fact, according to the Central Bank of Russia, the country’s Mir cards are usable in several other European, Middle Eastern, or Central Asian countries. These include Turkey, Vietnam, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, and the breakaway territories of South Ossetia and Abkhazia.
Card payment service specialist American Express (NYSE: AXP) also announced that it was suspending operations in Russia, and its ally nation Belarus. According to American Express, the decision is a continuation of “…the previous steps we have taken, which include halting our relationships with banks in Russia impacted by the U.S. and international government sanctions.”
Russia’s Governing Banks Seeks to Protect Its Commercial Banks Even as Wave of Sanctions & Boycotts Steepens
The Bank of Russia also wants to temporarily reduce the amount of information commercial banks must publish. The apex bank is doing this to protect the commercial banks and also limit risks from international sanctions. From their February statements, banks no longer have to release accounts prepared to national standards in their statements. In addition, these commercial banks were also not under any obligations to make additional disclosures on their websites.
Thousands of Russians, including holidaymakers, are presently stranded abroad as the country continues to suffer more secondary sanctions. So far, several nations have severed ties with Russia by closing off their airspaces to Russian aircraft. However, the Eastern European country has also instituted flight bans for several foreign airlines in retaliation.
On February 24th, Russian forces invaded neighboring Ukraine in an act of war, with airstrikes and shelling. This act of terror resulted in several Ukrainian casualties and drew the international community’s ire.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
