January 30, 2023

Visa and MasterCard operations in Russia have been suspended due to the Ukraine invasion

March 5 (Reuters) – US payment companies Visa Inc. (VN) And Mastercard Inc on Saturday said it would suspend operations in Russia in connection with the invasion of Ukraine and suspend all transactions there in conjunction with customers and allies.

In a few days, the company has announced that all transactions initiated with Visa cards issued in Russia will no longer work outside the country and any Visa cards issued outside Russia will no longer work within the country.

“We are compelled to act in the wake of Russia’s unprovoked occupation of Ukraine and unacceptable events,” said Al Kelly, chief executive of Visa.

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The White House has welcomed US President Joe Biden’s invitation to Ukrainian President Volodymyr Zhelensky to suspend their operations in Russia, as well as Visa and MasterCard. W1N2QI054

President Biden noted that his administration was increasingly providing security, humanitarian and economic assistance to Ukraine, and was working closely with Congress to obtain additional funding.

This move by the payment companies will cause further hurdles for Russians facing a revolving inflation, economic crisis and an uncertain future of even sharper pressure on imported goods.

Unprecedented Western sanctions imposed on Russia have paralyzed the country’s central bank’s $ 640 billion in assets; The global payment system banned many banks from Swift; And destroyed a third of its value this week, sending the ruble into free fall. read more

On Monday, the head of the Central Bank of Ukraine Girillo Shevchenko said Nikki Asia The Central Bank and the Russian regime in Zelenskiy urged Visa and MasterCard to stop their credit and debit card transactions issued by Russian banks to increase paper pressure.

Growing financial and technology companies have suspended Russian operations. PayPal Holdings Inc. (PYPL.O), Announced its decision earlier Saturday. read more

This chart taken on July 15, 2021 shows the credit card in front of the Visa logo displayed. REUTERS / Dado Ruvic / Illustration

Alternative system

Sberbank Rossii PAO (SBER.MM)Russia’s largest lender, Visa and MasterCard’s moves will not affect users of cards issued in Russia, DOS News reported.

According to Tass, Sberbank said that since transactions in Russia are carried out through the domestic national tariff card system, its customers can withdraw, transfer and pay at offline stores and Russian Internet stores.

Russia has been taking steps to increase the independence of its financial system for years, following the deterioration of relations with the West by annexing Crimea in 2014.

As an alternative to SWIFT, the country set up its own banking messaging system called SPFS, and MIR 2015 launched its own card payment system. They were part of Moscow’s efforts to create domestic financial instruments that would reflect the West. Country if sanctions are expanded. read more

MasterCard and Visa had significant business in Russia. By 2021, about 4% of MasterCard’s revenue will come from businesses operating inside and outside Russia. Meanwhile, business conducted inside and outside Ukraine accounted for 2% of its net income, according to data filed on Tuesday. read more

Visa estimates that by 2021 the total net income from Russia will be 4% of its total.

Mastercard, which has been operating in Russia for 25 years, has stated that Mastercard networks will no longer support its cards issued by Russian banks, and that any company card issued outside of Russia will not work at Russian merchants’ or ATMs.

MasterCard has said it has decided to suspend its network services in Russia, following its recent move to block several Russian financial institutions from the company’s payment network.

Visa also said this week that it had barred several Russian financial institutions from its network in line with government sanctions on Moscow’s invasion of Ukraine. read more

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John McGrath’s report in New York; Additional Report by Akansha Kushi in Bangalore Editing by Megan Davis, Paul Simao and David Gregorio

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