All ATM cards in Russia has stopped dispensing money to Russians, the leading cards in the country have blocked all cards in Russia.
Visa and Mastercard announced Saturday evening that the companies will suspend all operations in Russia, following a plea to do so made by Ukrainian President Volodymyr Zelenskyy during a video conference earlier in the day with U.S. lawmakers.
“We are compelled to act following Russia’s unprovoked invasion of Ukraine, and the unacceptable events that we have witnessed,” said Visa’s CEO.
“Cards issued by Russian banks will no longer be supported by the Mastercard network. And any Mastercard issued outside of the country will not work at Russian merchants or ATMs,” said a statement from the company.
As for Visa, transactions “initiated with Visa cards issued in Russia will no longer work outside the country, and any Visa cards issued by financial institutions outside of Russia will no longer work within the Russian Federation,” according to a statement from Visa Inc.
Visa will also no longer support domestic transactions in Russia, according to the company. All transactions will be the responsibility of Russia’s National Payment Card System, NSPK.
Both companies cited Russia’s devastating military attack on Ukraine and its civilians as the reason behind the decisions.
“We are compelled to act following Russia’s unprovoked invasion of Ukraine, and the unacceptable events that we have witnessed,” Al Kelly, chairman and chief executive officer of Visa, said in a statement.
He added: “We regret the impact this will have on our valued colleagues, and on the clients, partners, merchants and cardholders we serve in Russia. This war and the ongoing threat to peace and stability demand we respond in line with our values.”
Mastercard noted that it had already recently blocked “multiple financial institutions” from the Mastercard payment network, apparently as part of ongoing sanctions against Russia.
“These have been and will continue to be very difficult days — most of all for our employees and their families in Ukraine; for our colleagues with relatives and friends in the region; for our colleagues in Russia; and for the rest of us who are watching from afar,” Mastercard said in its statement.
“As we take this step, we join with so many others in hoping for and committing to a more positive, productive and peaceful future for us all.”
Mastercard said it will continue to focus on the safety and well-being of nearly 200 employees in Russia, and will continue to provide pay and benefits to them.
In a video call on Saturday morning with members of Congress, Zelenskyy asked for more lethal aid to fend off the invading Russian army, and pleaded for additional sanctions, including a ban on Russian oil imports.
He also asked that access be suspended to Visa and Mastercard credit cards in Russia, a source told The Associated Press.
President Joe Biden hailed the decision by Mastercard and Visa to suspend service in Russia.
However, Russia’s major banks, including state-backed Sberbank, have already downplayed the impact the move will have on computers.
Russia’s central bank insisted that all Visa and Mastercard bank cards issued by Russian banks would continue to operate normally on Russian territory.
Russia’s biggest state-backed bank, Sberbank, said similar, adding the cards would work “to withdraw cash, make transfers using the card number, and for payment at offline as well as at online Russian stores”.
Cards will continue to work on Russian territory, the bank said, because all payments in Russia are made through a national system and don’t depend on foreign systems.
Since 2015, the Russian government has required all domestic payment transactions in the country be processed there. This followed similar suspensions of operations by Visa and Mastercard in Crimea, following its annexation.
Several Russian banks suggested that they would start issuing cards that use the Chinese UnionPay system, coupled with Russia’s Mir payment network, to avoid any impact for consumers.
‘Adding to financial turmoil’
Susannah Streeter, senior markets analyst at Hargreaves Lansdown, pointed out that the move came after the disconnection of Russian banks from the Swift international payments system and a dramatic plunge in the rouble.
“Bank customers in Russia may be able to keep using the cards until they expire, but the boycott means Russians abroad will see their payments rejected, with the shutting out of some big spenders also likely to hurt a raft of businesses reliant on their custom,” she said.
She added that China’s UnionPay is likely to be the alternative “system of choice” for Russian banks as it’s already accepted around the world, although not as widely as Visa and Mastercard.
“But it will take significant time to re-issue millions of cards, and will add to the financial turmoil in the country.”
The payments giants’ announcement comes amid a widening corporate backlash to Russia’s actions in Ukraine.
Inditex-owner Zara and French fashion houses LVMH, Kering and Chanel have all said in recent days that they would stop sales temporarily in Russia.
PayPal also said on Saturday that it had shut down services in Russia but that it would support withdrawals “for a period of time”.
This would ensure that account balances were dispersed “in line with applicable laws and regulations”, it said.
The Ukrainian government had been calling on PayPal to quit Russia and help its officials with fundraising.
Source: BBC News