All eyes are still on Russia as it continues its war with Ukraine. With sentiments pouring from around the world, a lot of businesses have decided to stop supporting Russia as part of their efforts to stop the war that has already killed so many people.
Recently, payment processing giants Visa and Mastercard announced that they will suspend operations in Russia after March 9. This is following many Western companies–such as Deloitte and Ernst & Young–decision to cut their links to Russia following its invasion of Ukraine.
Now, Russian banks like Alfa-Bank and Sberbank are beginning to explore payment processing alternatives as they scramble to keep their operations up and running despite these huge changes. A possible plan B is China’s UnionPay.
On March 6, Sberbank and Tinkoff Bank revealed that they are considering the possibility of issuing cards using UnionPay, a payment system owned by China, to allow customers to make international payments to over 180 countries.
The banks plan to co-badge their local Mir payments system with UnionPay, so clients can still process payments overseas even after Visa and Mastercard cut ties with them.
The suspension means that while Russian-issued Mastercard and Visa cards will still function until their expiration date, customers will not be able to use their cards to make purchases on foreign websites and make transactions abroad.
Being described by Russia’s foreign minister as its “most important strategic partner,” the country is now looking to China as an important connection in helping it navigate through the changes brought about by many global companies withdrawing their services in Russia in support of Ukraine.
Because UnionPay is accepted in online stores in more than 200 countries and physical stores in more than 180 countries, Russian banks see it as a viable replacement for Visa and Mastercard.
China has always refused to make any statements about Russia’s invasion of Ukraine. But the country has also never offered its ally any form of practical aid, possibly due to fear that it would affect its economic relationship with the United States, especially its access to the US-dollar international financial system.
Guo Shuqing, the country’s top banking regulator, said that China will not be participating in any financial sanctions against Russia, although some state-owned banks have imposed some limitations for purchases related to Russian commodities.
As Russia continues to invade Ukraine, businesses are also scrambling to stay afloat because of the huge economic impact of this war.
High-risk merchant account processors are becoming an important part of the financial ecosystem because they will help businesses sustain their operations even if there are sudden shifts in the market.
As for Russia, it could be seeing itself finding more payment processing alternatives to different services offered by Western companies that are now severing ties with the country.