WASHINGTON: US payments firms Visa and Mastercard said they were suspending operations in Russia over the invasion of Ukraine and would work with clients and partners to cease all transactions there.
Within days, all transactions initiated with Visa cards issued in Russia will no longer work outside of the country and any Visa cards issued outside of Russia will no longer work within the country, the company said. “We are compelled to act following Russia’s unprovoked invasion of Ukraine, and the unacceptable events that we have witnessed,” Al Kelly, chief executive officer of Visa, said in a statement.
US President Joe Biden, in a call with Ukraine’s President Volodymyr Zelenskiy, welcomed Visa’s and Mastercard’s decisions to suspend their operations in Russia, the White House said. “President Biden noted his administration is surging security, humanitarian, and economic assistance to Ukraine and is working closely with Congress to secure additional funding,” the White House said.
The move by the payments firms could mean more disruption for Russians who are bracing for an uncertain future of spiraling inflation, economic hardship and an even sharper squeeze on imported goods. Western sanctions imposed on Russia have frozen much of the country’s central bank’s $640 billion in assets, barred several banks from global payments system SWIFT, and sent the rouble into free-fall, erasing a third of its value this week.
On Monday, Ukraine’s central bank chief Kyrylo Shevchenko said the central bank and Zelenskiy urged Visa and MasterCard to halt transactions of their credit and debit cards issued by Russian banks to increase pressure on the Russian regime. A growing number of financial and technology companies have suspended Russian operations.
READ MORE: Visa, Mastercard block Russian financial institutions
Russia’s largest lender Sberbank Rossii said the moves by Visa and Mastercard would not affect users of the cards it issues in Russia. Sberbank said its customers would be able to withdraw cash, make transfers, pay both in offline stores and Russian internet stores because transactions in Russia pass through the domestic National Payment Card System which does not depend on foreign payment systems.
Russia has been taking steps to increase the independence of its financial system for years. The country set up its own banking messaging system, known as SPFS, as an alternative to SWIFT and its own card payment system MIR began operating in 2015.
Mastercard and Visa had significant business in Russia. In 2021, about 4% of Mastercard’s net revenues were derived from business conducted within, into and out of Russia. Visa also reported that total net revenue from Russia in 2021 was about 4% of its total.
Mastercard, which has operated in Russia for 25 years, said its cards issued by Russian banks will no longer be supported by Mastercard networks, and that any company card issued outside of Russia will not work at Russian merchants or ATMs.
Mastercard said it decided to suspend its network services in Russia following its recent action to block multiple Russian financial institutions from the company’s payment network, as required by regulators globally. Visa also said this week it blocked multiple Russian financial institutions from its network in compliance with government sanctions imposed over Moscow’s invasion of Ukraine. read more
