Credit cards (pixabay photo)
The American payment companies Visa and MasterCard announced last night (Saturday) that they are suspending operations in Russia due to the invasion of Ukraine, and that they will work with customers and partners to stop all transactions there.
Within days, all transactions initiated with visa cards issued in Russia will no longer work outside the country and all visa cards issued outside Russia will no longer work within the country, the company said.
“We are forced to act in the wake of Russia’s unprovoked invasion of Ukraine, and the unacceptable events we are witnessing,” Visa CEO El Kelly said in a statement.
US President Joe Biden, in a conversation with Ukrainian President Volodymyr Zalansky, welcomed Visa and MasterCard’s decisions to suspend operations in Russia.
“President Biden has noted that his administration is stepping up its security, humanitarian and economic assistance to Ukraine and is working closely with Congress to secure additional funding,” the White House said in a statement.
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The move by the payment companies may lead to further disruption for the Russians preparing for an uncertain future of reversible inflation, economic distress and an even sharper write-off on imported goods.
Unprecedented Western sanctions imposed on Russia froze a large portion of the country’s central bank assets by $ 640 billion; A number of banks have left the global SWIFT payment system; And the ruble crashed after erasing a third of its value this week.
On Monday, the head of the Central Bank of Ukraine, Kirilo Shevchenko, said that the Central Bank and Zlansky urged Visa and MasterCard to stop transactions on their credit and debit cards issued by Russian banks to increase pressure on the Russian regime, the newspaper said.
The number of financial and technology companies that have suspended Russian operations is growing. PayPal, announced its decision earlier on Saturday.
Sberbank Rossii PAO (SBER.MM), Russia’s largest lender, has issued a statement saying that Visa and MasterCard’s moves will not affect users of the cards it issues in Russia, Tass News reported.
Sberbank said its customers will be able to withdraw cash, make transfers, pay at both offline stores and Russian online stores because transactions in Russia go through a local national payment card system that is not dependent on foreign payment systems, according to Tass.
Russia has been taking steps to increase the independence of its financial system for years, especially after relations with the West deteriorated following the annexation of the Crimean peninsula to the country in 2014.
The state has set up its own banking messaging system, known as SPFS, as an alternative to SWIFT and its own MIR card payment system began operating in 2015. They were part of Moscow’s efforts to develop homemade financial tools to reflect Western ones and to protect the country in the event of sanctions being extended.
MasterCard and Visa had significant business in Russia. In 2021, about 4% of MasterCard’s net revenue came from businesses made inside, to and outside Russia. Meanwhile, businesses carried out inside, to and outside of Ukraine accounted for 2% of its net revenue, according to the financial statements released on Tuesday. Visa also reported that total net revenue from Russia in 2021 was about 4% of total revenue.
MasterCard, which has been operating in Russia for 25 years, said that its cards issued by Russian banks would no longer be supported by MasterCard networks, and that any card of the company issued outside Russia would not work at Russian merchants or ATMs.
MasterCard said it had decided to suspend its network services in Russia following its recent move to block a number of Russian financial institutions from the company’s payment network, as required by world regulators.
Visa also said this week that it had blocked a number of Russian financial institutions from its network in accordance with government sanctions imposed on Moscow’s invasion of Ukraine.
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