With the invasion of Ukraine by Russia, several companies suspended their services to the Soviet country, including master carda Visa and American Express. Following the departure of US providers, Russia announced that it may turn to China UnionPay, the world’s largest card provider, to supply the country’s payment and settlement activities.
Three US payments companies announced the suspension of their services in Russia between March 5 and 6 – a move that further isolates the Russian economy. According to payment providers, cards issued outside the Soviet country will no longer work at ATMs or at domestic businesses.
However, according to the Central Bank of Russia, MasterCard and Visa cards issued in the country can still be accepted until the expiration date.
After the providers left, Russia’s largest bank, Sberbank, announced that the company is considering the possibility of issuing cards using the Chinese system, UnionPay, in conjunction with the Russian domestic payment system, Mir, according to Bloomberg.
Meanwhile, Alfa Bank and Tinkoff Bank are also in talks with UnionPay and studying the possibility of issuing cards through the Chinese payment system.
If UnionPay is widely adopted by Russian banks, citizens will be able to pay in physical stores in more than 180 countries around the world and make international transactions online in more than 200 regions abroad, according to the company.
With the absence of Visa, MasterCard and Amex in the country, Russia’s central bank has advised its citizens to adopt cash as a form of payment abroad. The organization also said that the Mir domestic network card can be used in Turkey, Vietnam, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan and isolated regions of South Ossetia and Abkhazia.
The adoption of the UnionPay system could leave Russia more dependent on China than Europe and the United States, and it is also unknown how much risk the world’s second-largest economy is willing to take on the Soviet country, given that Beijing was quick to help Russia after being hit by sanctions from around the world.
Furthermore, if the Chinese payment system is adopted by most Russian banks, the company could benefit even more, and become a strong rival to Visa and MasterCard. UnionPay currently has over 7 billion cards in circulation – most of which are 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 – Roselkhozbank, Pochta Bank, Gazprombank, Bank St. According to the Russian news agency Tass, Petersburg has few institutions.
Source: canaltec
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