With Russia’s invasion of Ukraine, many companies suspended their services from the Soviet country, including Master Card Credit Carda visa and American Express. After the departure of US service providers, Russia announced that it may turn to China UnionPay – the world’s largest card provider – to provide the country with payment and settlement activities.
The three US payment companies announced the suspension of their services in Russia between March 5-6 – a move that further isolates the Russian economy. According to payment service providers, cards issued from outside the USSR will not work in ATMs or local companies.
However, MasterCard and Visa cards issued in the country can still be accepted until the expiration date, according to the Central Bank of Russia.
After the departure of the service providers, Russia’s largest bank, Sberbank, announced that the company is studying the possibility of issuing cards using the Chinese system UnionPay, in conjunction with Russia’s domestic payment system, Mir, according to Bloomberg.
Meanwhile, Alfa Bank and Tinkoff Bank spoke with Unionpay and studied the possibility of issuing cards through the Chinese payment system.
If UnionPay is widely adopted by Russian banks, citizens will be able to make payments in physical stores in more than 180 countries around the world and international online transactions in more than 200 territories abroad, according to the company itself.
With no Visa, Mastercard and Amex in the country, the Russian Central Bank advised its citizens to adopt cash as a means of payment abroad. The foundation also said that Mir LAN cards can be used in Turkey, Vietnam, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan and the breakaway territories of South Ossetia and Abkhazia.
The potential adoption of UnionPay could make Russia increasingly dependent on China due to its isolation from Europe and the United States, and it is also unknown how much the world’s second largest economy is willing to risk it for the Soviet state, given that Beijing was quick. To help Russia after its economy was subjected to sanctions from all over the world.
In addition, if the Chinese payment system is adopted by most Russian banks, the company may benefit even more, and it can become a strong competitor to Visa and Mastercard. UnionPay currently has over 7 billion cards in circulation – most of them in China.
It is important to note that before the announcement of the departure of Visa, Mastercard and Amex, several Russian banks were already issuing UnionPay cards – with Rosselkhozbank, Pochta Bank, Gazprombank, Bank St. Petersburg is among the institutions, according to the Russian news agency TASS.
source: Canaltech
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