Over the weekend, Visa and Mastercard announced that they would suspend their operations in Russia. A day later, American Express followed suit, adding Belarus as the Russian invasion continues in Ukraine.
- Visa, Mastercard and American Express have announced that they will suspend their operations in Russia.
- The announcements followed steps taken by the payment processing companies to comply with sanctions against the country.
- Russian banks will no longer receive payment support from the three companies, and cards issued outside of the country will not work within its borders.
- Russians won't be impacted heavily by the decisions due to the country's homegrown payment processor, Mir.
Payment Processors Add to the Growing List of Sanctions Against Russia
Over the past two weeks, the Russian invasion of Ukraine has resulted in an onslaught of government sanctions, as well as steps taken by private companies against the Putin administration.
Over the weekend, payment processing companies Visa, Mastercard and American Express announced that they would suspend operations and support in the country. American Express also included neighboring country Belarus in its decision.
According to the companies, cards issued by Russian banks will no longer receive support on their networks, and cards issued by non-Russian banks will not work if used with Russian merchants or ATMs.
In a statement, Mastercard noted that it had operated in Russia for more than 25 years and is interested in resuming operations when the time is right. The company has also donated $2 million to support relief efforts in Ukraine and invites others to donate to the American Red Cross and Save the Children.
Al Kelly, chairman and CEO of Visa, said, "We are compelled to act following Russia’s unprovoked invasion of Ukraine, and the unacceptable events that we have witnessed. This war and the ongoing threat to peace and stability demand we respond in line with our values." The Visa Foundation has also announced it will provide a $2 million grant to the U.S. Fund for UNICEF to support humanitarian efforts in Ukraine.
In a memo to American Express employees, chairman and CEO Stephen Squeri noted that the decision is in addition to the steps the bank has taken to halt relationships with sanctioned Russian banks, as well as the $1 million in aid pledged to organizations providing relief in Ukraine.
How Payment Processing Suspensions Will Impact Russia
The decisions by Visa, Mastercard and American Express may not impact Russian citizens and banks as much as you might think, at least not in the short term.
Following similar sanctions by the U.S. in 2014, when Russia annexed Crimea from Ukraine, the Russian Central Bank developed Mir, a payment system for domestic transactions. Because many banks use Mir instead of Visa, Mastercard and American Express to process payments, they claim that Russians can continue to use their cards for purchases, transferring funds, withdrawing cash and account access until their expiration date.