Payment cards Visa and Mastercard have suspended their operations in Russia. The Moscow has planned to get around it by issuing banking cards using the system of Chinese operator “Union Pay” along with its own MIR network. Prominent banks include Sberbank, as well as Alfa Bank and Tinkoff.
Not just Visa and Mastercard, but even American Express and Paypal have pulled the plugs as the West continue to come down hard on Russia with its sanctions. Sberbank said the moves by American payment companies won’t hinder Russian customers as transactions in Russia pass through its local domestic National Payment Card System which doesn’t depend on foreign payment systems.
Even since Crimea joined the Russian Federation in 2014, Russia has been weaning itself away from the West’s financial structure.
Russian customers will have to switch to newer debit/credit cards issued by Russian banks supported with MIR and UnionPay. Notably, UnionPay already have significant presence in Russia, and a large number of Russians already use UnionPay cards issued by several Russian banks.
According to an UnionPay note issued in 2017, more than 85% ATMs accepted UnionPay cards for withdrawing Russian roubles. The company had said that about 600,000 POS terminals and 100,000 ATMs accepted UnionPay cards, and the numbers must have gone up in the last four years. Therefore, the transition from American companies to UnionPay should be smooth.
UnionPay which kicked off in 2013, is a Chinese payments managing company that issues banking cards and deals with operations related to banking transactions. With international recognization in more than 180 countries, UnionPay International (a Global level subsidiary of China UnionPay) has issued banking cards in more than 70 countries. Headquartered in Shanghai, the company will soon operate in Russia in partnership with Russia’s local MIR.
Amidst Russia’s global isolation, China has emerged as a key player in developing economic bonds with Russia. China and Russia also share close bilateral ties in trade which recorded a rise of 35.9% last year with total trade at $146.9 billion. The dragon also reverted to its own currency while pursuing trade with Russia with an aim to limit the US Dollar.
