By Amelia Isaacs on Monday 7 March 2022
Russian banks are turning to China for help after Visa, Mastercard and AmEx have all suspended operations following the invasion of Ukraine.
Sberbank and Alfa Bank plan to use China’s UnionPay system to provide bank cards as more and more companies move to boycott Russia.
This follows several Russian banks being removed from the global payments messaging system Swift, and fintechs like Wise and remittance processor Remitly suspending their money transfer services in Russia last week.
Both Sberbank and Alfa Bank said the UnionPay network would be coupled with Russia’s own payment system Mir, which was established by the Central Bank of Russia in response to Western sanctions following the annexation of Crimea in 2014.
Smaller banks and fintechs alike have also indicated plans to use UnionPay cards, including Tinkoff, Rosbank and the Credit Bank of Moscow.
For Visa and AmEx, cards issued in Russia will no longer work outside the country and any cards issued outside of Russia will no longer work within the country.
“We are compelled to act following Russia’s unprovoked invasion of Ukraine, and the unacceptable events that we have witnessed,” said Al Kelly, chairman and chief executive officer of Visa.
“We regret the impact this will have on our valued colleagues, and on the clients, partners, merchants and cardholders we serve in Russia. This war and the ongoing threat to peace and stability demand we respond in line with our values.”
AmEx chairman and Chief Executive Officer Stephen J. Squeri shared in a company memo, “In light of Russia’s ongoing, unjustified attack on the people of Ukraine, American Express is suspending all operations in Russia [...] This is in addition to the previous steps we have taken, which include halting our relationships with banks in Russia impacted by the U.S. and international government sanctions.”
Mastercard said on Saturday that cards issued by Russian banks will not be supported by its network, regardless of where they are used.
In addition, Mastercards issued outside of Russia will not work within the country.
The company amended its statement the next day to clarify “all domestic transactions in Russia are mandated to be processed over a switch run by the central bank.”
“Once the suspension of Mastercard network services is completed in the coming days, the company will have nothing to do with these transactions, including any ability to block them.”
PayPal has also shared its support for Ukraine by ending its services in Russia.
Vice Prime Minister of Ukraine Mykhailo Fedorov took to Twitter to share PayPal’s Chief Executive Officer Dan Schulman’s letter that states, “Under the current circumstances, we are suspending PayPal services in Russia. We are also doing all that we can to support our staff in the region during this deeply difficult time.”