Russian Banks Look to China’s UnionPay after Visa, Mastercard Freezout

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The American payments heavyweights Visa and Mastercard, as well as the card issuer American Express, have suspended their operations in Russia – joining an increasingly lengthy list of firms severing their trade links with the country. But Russian banks have indicated that they may look to domestic and Chinese alternatives to Western platforms.

Visa and Mastercard both announced intentions to wind down authorization requests and payment clearing this week, although the latter explained that work would begin to restore operations when it is “appropriate and permitted by law.”

Tass reported that an American Express statement read: “American Express cards issued worldwide will no longer work at banks and ATMs in Russia.” The firm added that it would also be “terminating” all of its services in Belarus.

But per Reuters and Interfax, Russia’s Central Bank and its largest commercial bank Sberbank have indicated that Russian lenders want to use China’s UnionPay platform.

Tinkoff, another major Russian bank, also indicated that it may make a similar move, which would involve “co-badging” the Russian Mir payments platform with UnionPay.

Sberbank said that it would “inform additionally of the date” its “new payment card will be issued.”

The Central Bank claimed that “all Visa and Mastercard cards issued by Russian banks” would “continue operating in Russia as usual until their expiry date.”

The Central Bank added that transactions on these cards are processed “within the National System of Payment Cards inside Russia, and sanctions will not affect them,” Interfax noted, while “funds on clients’ accounts linked to such cards are fully preserved and accessible.”

The accountancy giants PwC and KPMG, which employ a combined total of around 5,000 staff in Russia, have also announced they will be closing down their Russian offices.

Meanwhile, South Korea has announced that it will suspend all transactions with the Russian Central Bank “due to the situation” in Ukraine, Tass reported.

The same Russian state-run media agency reported that President Vladimir Putin had also signed a law that will allow law enforcement officials to seize funds belonging to individuals found guilty of corruption – and use the money to boost the Treasury’s coffers.

And Tass reported that the Russian Ministry of Finance stated the government would “fulfill its obligations to service and redeem government securities” and other government debt issuances – although it indicated that fulfilling its obligations overseas buyers of Russian debt could be impaired by Western-led sanctions.

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