The Russian payment system intervenes for Visa, Mastercard

Russian and Chinese entities that offer alternatives to the dominant Visa and Mastercard payment networks could reap significant benefits from sanctions imposed by the West in response to Russia’s invasion of Ukraine, the Financial Times reported on Wednesday (April 20).

Visa and Mastercard use was widespread in Russia – the two companies had 70% of the debit card market there – when the two card giants halted some transactions in early March, according to FT. Other digital card and wallet companies that have followed suit include American Express, Japan’s JCB, PayPal, Western Union, Apple Pay and Google Pay.

“The majority of those affected by this left the country in the last two weeks or lived abroad earlier,” a Moscow employee of a payment company told FT.

See also: Visa expects global growth to cover Russia’s revenue loss within a year

Russia built its own payment system after the sanctions that followed the 2014 invasion of Crimea. The country launched the national card payment system in August 2014. A year later, Russia launched the card Mir, which some government employees and retirees are required to use, FT reported.

Many would-be card users in Russia are quickly adopting other options, including China-based UnionPay, FT said. While few major Russian banks used UnionPay before the invasion, some of the larger ones have shown interest in the past two months.

A person identified as a “senior payments executive” said adoption of UnionPay cards could increase a hundred to a thousand times in Russia.