Western sanctions in Russia keep increasing across the board, with several companies announcing their withdrawal from the territory, including Mastercard and Visa, major financial payment processors.
Now, as the companies pulled out of Russia in the wake of the invasion of Ukraine, leading Russian banks are now considering using a Chinese payment rival following Visa and Mastercard suspending their operations in the country.
The significance of Visa and Mastercard in the Russian market lies in over 90% of debit and credit card payments outside China are handled by both companies. In addition, American Express has announced that it will no longer offer international-issued credit cards in Russia beginning on March 6. UnionPay, established in 2002, provides cross-border payment services to merchants and cardholders in 180 countries and regions.
Russian Banks Using UnionPay
UnionPay is already in use by some Russian banks, including Rosselkhozbank, Post Bank, Gazprombank, BSP, Promsvyazbank, VBRR, Primsotsbank, Zenit and Sovcombank.
Sberbank PJSC said it plans to issue new cards through Russia's Mir payments system and China's UnionPay. In addition, Alp Bank, Russia's largest private bank, is switching to UnionPay for credit card issuance. As of now, Tinkoff Bank has not issued cards through UnionPay but intends to do so as soon as possible.
Measures Taken by Western
It was decided on February 26 by the United States, the European Union, the United Kingdom and Canada to cut certain Russian banks off from SWIFT. This financial messaging system helps most of the world's banks to conduct electronic transfers. Japan followed a day later. Moreover, the Russian central bank's assets have been frozen by Western nations, making it harder for it to access its $630 billion in reserves.
Last week, financial services giant PayPal confirmed that it had suspended its services in Russia amid the invasion of Ukraine. Dan Schulman, the President and Chief Executive Officer of PayPal, said that the tragedy in Ukraine has been devastating for all.
PayPal joins a list of other leading financial firms in seizing operations in Russia. According to Schulman, PayPal stands with the people of Ukraine. For its employees in Russia, the company is providing all possible support.
