No help from China
Russia cannot easily replace US credit giants
04/13/2022 11:51 am
After the shutdown of Visa, Mastercard and American Express, many Russian citizens rely on the credit cards of the Chinese provider UnionPay. But it’s not that easy, because foreign internet shops are blocking payments for all cards issued in Russia.
In response to the Ukraine war, the world’s largest credit card providers Visa, Mastercard and American Express suspended their operations in Russia at the beginning of March. Cards issued in Russia are no longer accepted abroad since March 10, and foreign cards no longer work in Russia. The Moscow leadership then promised a quick replacement with its own credit card system called “Mir” and the switch to Chinese UnionPay cards.
However, according to media reports, the departure of the US credit giants is not so easy to offset. Foreign online shops have blocked payments for all cards issued in Russia, including UnionPay, reports Kommersant daily. According to the newspaper, there are 500,000 UnionPay credit cards in Russia. The number has increased tenfold within a month. After the shutdown of Visa and Mastercard and American Express in Russia, many citizens had hoped to be able to pay with cards from Chinese banks.
UnionPay could actually fix the situation
The majority of UnionPay cards are intended for online shopping. But there are problems with this because most international online retailers and their banks generally no longer accept cards issued in Russia. In theory, UnionPay could fix the situation, according to the newspaper report. But the Chinese credit card organization has so far not made any efforts to do so, it said.
Visa CEO Al Kelly regrets the impact the measure will have on employees, customers, partners, merchants and cardholders in Russia. “This war and the continuing threats to peace and stability require that we respond in accordance with our values.” Mastercard said the decision was not easy to make. “Mastercard has been operating in Russia for more than 25 years.” The almost 200 employees will continue to be paid their wages. If it is “reasonable and legally permissible”, they want to resume operations.
Long lines in front of machines
Visa and Mastercard had previously stopped processing transactions for Russian banks affected by international sanctions over the war in Ukraine. The Wall Street Journal recently reported that in 2020, of the debit and credit cards issued in Russia, Visa and Mastercard cards accounted for around 74 percent of the country’s payment transactions.
Even before the credit card companies announced at the beginning of March, long queues had formed at the machines that were still working. Many people also waited at bank counters to stock up on cash – or to close their accounts. Russia’s central bank has repeatedly announced that the situation is under control, ATMs will continue to be filled with money, and deposits in the accounts are secured.