28.2 C
Lagos
Monday, July 4, 2022
HomeFinancial ServicesRussian banks turns to China’s UnionPay after Visa and Mastercard exit

Russian banks turns to China’s UnionPay after Visa and Mastercard exit

As the war between Russia and Ukraine continues to escalate, several Russian banks have reportedly turned to China’s bank card service ‘UnionPay’ as US card services Visa and Mastercard suspend services in Russia.

The Russia-Ukraine invasion war which began in late February 2022 has caused Russia to face many financial sanctions from the US and its Western allies.

Russia-issued credit cards using the Visa and Mastercard systems will stop functioning after March 9, part of a broader global economic backlash over the ongoing Russia-Ukraine war.

US card operators Visa and Mastercard handle 90% of all debit and credit card payments outside China. Another US operator American Express said on March 6 that it will stop services for internationally-issued cards in Russia.

As a way to remain in business, some Russian banks have already announced they will use China’s payment system UnionPay to issue credit and debit cards. Some of the banks include; Rosselkhozbank, Post Bank, Gazprombank, Bank St. Petersburg, Promsvyazbank, VBRR, Primsotsbank, Zenit, and Sovcombank.

What Russian banks are saying

After Visa and Mastercard announced a suspension of operations in Russia on March 5, several local Russian banks said they will switch to China’s UnionPay.

Sberbank PJSC said it’s looking into issuing new cards with Russia’s Mir payments system and China’s UnionPay.

Alfa Bank, Russia’s largest private bank, will switch to UnionPay to issue cards.

Tinkoff Bank stated that they have not issued cards with UnionPay, but will begin using the card provider as soon as possible.

A peep into China’s UnionPay

Founded in 2002, UnionPay is both a network and a brand. It has debit, credit and prepaid cards in China.

While best known and mostly used inside China, where it has about 90% market share, it is growing outside China as well.

Internationally, it has steadily grown acceptance of UnionPay cards through deals with merchant acquirers and banks that own ATM networks. It also partners with local financial institutions in Southeast Asia, Africa and elsewhere to issue UnionPay cards.

The company’s cards are accepted in 180 countries and regions and are accepted by 55 million merchants.

More than 150 million cards have been issued outside China in 67 countries and regions, according to UnionPay.

What you need to know

  • Russia launched what it called “a special military operation” on Ukraine on Feb. 24. Since then, the country has received a series of financial sanctions from the US and its Western allies.

China could face more geopolitical pressure from the US. The country has toed a diplomatic line since the conflict began in late February, advocating for peaceful resolutions (in Chinese).

The US, EU, the UK, Canada has agreed on Feb. 26 to cut selected Russian banks off from SWIFT, a financial messaging system that helps the majority of banks around the world to process electronic funds transfers. Japan joined the move a day after.

Western nations have also frozen the Russian central bank’s assets, limiting its ability to access its $630 billion reserves.

Paypal shut down its service in Russia on March 5.

It’s a global disaster politically” for UnionPay to seem to take advantage of Russia’s invasion of Ukraine.

Latest articles

Buhari’s ministers who officially resigned ahead of 2023 elections

Not less than nine Ministers in President Muhammadu Buhari’s cabinet, have resigned their appointments...

Buhari’s ministers who officially resigned ahead of 2023 elections

Not less than nine Ministers in President Muhammadu Buhari’s cabinet, have resigned their appointments...

FG launches N-Alert mobile app to deter kidnappers, terrorist, bandits, others

In a bid to curb kidnapping, terrorism, banditry and other vices facing the country's...

WhatsApp increases Group participants to 512, 2GB file sharing now available

WhatsApp has announced new features which will be rolling out slowly in the coming...

More like this

WhatsApp increases Group participants to 512, 2GB file sharing now available

WhatsApp has announced new features which will be rolling out slowly in the coming...

4 Men arrested for gang raping a Monitor Lizard in India

Four men have been arrested after one of the accused’s phones was discovered to...

Keystone Bank reopens its revamped Ikota-VGC, Lagos branch for business

Leading financial service provider in Nigeria, Keystone Bank Limited, has announced the re-opening of...