Russian banks are looking to China to issue their customers new bank cards that will be accepted overseas as a suspension of service deadline approaches for Russia-based customers of Mastercard and Visa, the world’s largest credit card and digital payment processors.
As some companies choose to follow NATO members and their allies in severing business links with Russia, Russian banks are being cut off by major international service providers and forced to turn to China, which is positioning itself as a neutral observer of the conflict in official statements, despite behind-the-scenes cooperation with Russia.
Russians overseas are faced with the prospect of their Mastercard and Visa cards being declined as of March 10, and have been warned to withdraw cash while their cards still work.
In the few countries and regions that support Russia’s Mir payment system—Turkey, Vietnam, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, and Georgia’s breakaway territories of South Ossetia and Abkhazia—cards will continue to work.
UnionPay will process transactions for Russian-issued cards, as China’s ruling regime hasn’t declared any sanctions against Russia, while speaking out against Western sanctions.
According to Russian state media, Alfa Bank JSC, Russia’s largest non-state lender, also said it was offering cards with UnionPay. Russia’s majority government-owned Sberbank and major online-only Tinkoff Bank, which hasn’t been sanctioned, have also indicated that they’re looking into the possibility of issuing cards co-powered with UnionPay.
“We will notify about the time of the launch at a later time,” Sberbank said.
Tinkoff founder Oleg Tinkoff said on Instagram that the situation in Ukraine is unacceptable.
“We are against this war,” he said on behalf of the bank, stating his view that states should use their money to heal rather than go to war.
Market Share
While intending to have an isolating effect, the Western-led sanctions could have the added effect of pushing Russian society to become increasingly reliant on Chinese systems, expanding China’s market share.Aided by the Communist Party, UnionPay is the provider of most card payments in China. According to its website, its cards are now accepted in 180 countries and regions. Numerous Russian banks such as Rosselkhozbank, Pochta Bank, and Gazprombank already offer services with UnionPay.
Meanwhile, Japanese credit card company JCB, in an update on March 7, said that it would also be suspending some of its services to Russian entities, in line with Japan’s sanctions against Russia, Dow Jones Newswires reported. However, Japan has yet to sanction Sberbank, which JCB is working with to issue credit cards as Western companies continue to retreat.
Domestic Transactions
Transactions inside Russia won’t be immediately affected by Mastercard and Visa’s exit, due to prior arrangements with the companies to integrate their services with Russia’s national payments system—an initiative ordered by Russian President Vladimir Putin after the first round of Western sanctions in response to Russia’s annexation of Crimea.Mastercard and Visa transactions will continue to be approved in Russia until the cards expire, Mir said in a statement.
However, Alfa Bank has said it is still planning to issue cards with both Mastercard and Visa as it still has several million cards in stock.
“We hope that the international payment systems will return to our country. Then the cards will automatically start working all over the world,” the bank stated, according to The Wall Street Journal.
This week, Russia’s central bank also announced that it’s capping the amount of money Russians can send to family and relatives overseas at $5,000 per month, according to a report by Kommersant, which cited a letter from the regulator.
