Russian banks that have been barred from using Mastercard’s card payment networks have shifted their operations to UnionPay, a competing Chinese system.
On Sunday, credit cards issued by Russian banks that utilize the Visa and Mastercard payment systems would no longer work outside of Russia after March 9, which added that certain local lenders will instead use China’s UnionPay system, according to Russia’s central bank, the Reuters reported.
In response to Russia’s invasion of Ukraine, Mastercard and Visa have halted operations in Russia. As a result, their networks will not support their respective branded cards issued by Russian banks, either within Russia or in foreign countries.
The bank indicated that Russian-issued Mastercard and Visa cards would be accepted within Russia until they expired. The overseas restriction also applies to cards issued by international banks’ local subsidiaries.
UnionPay is a Chinese system that is enabled in 180 countries and specializes in providing cross-border payment services. In using UnionPay as an alternative, Russia’s Mir Network, a payment system for electronic fund transfers and is sponsored by the Russian government will partner with the Chinese system to issue co-badged cards.
BREAKING: Russia’s state owned Sberbank is to replace VISA and MasterCard with a new “MIR” card system in partnership with China’s Unionpay.
— Sunderland Global Media (@Sunderland_GM) March 6, 2022
Sberbank SBRCY, Tinkoff Bank, and ICD are investigating the prospect of producing a co-badged card between UnionPay and Mir, a Russian-based card operating system, while Alfa-Bank is preparing to roll out UnionPay-branded cards.
According to TASS, cards that combine the Mir network and the UnionPay system will allow users to make international payments and cash withdrawals. Alfa-Bank, a Russian private bank, is also examining this possibility.
Mastercard announced its decision in a statement that said:
“We don’t take this decision lightly. Mastercard has operated in Russia for more than 25 years. We have nearly 200 colleagues there who make this company so critical to many stakeholders. As we take these steps, we will continue to focus on their safety and well-being, including continuing to provide pay and benefits. When it is appropriate, and if it is permissible under the law, we will use their passion and creativity to work to restore operations.”
Visa issued a statement declaring:
“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.”
Sources: Thegatewaypundit, Bloomberg, Businessinsider