Russian banks turn to Chinese card system as American Express, Visa, Mastercard suspend Russian operations

03/10/2022 / By Kevin Hughes

Russian users of American Express, Visa and Mastercard have turned to China’s UnionPay credit card system following Russia’s complete expulsion from the Western financial system.

American Express along with Visa and Mastercard suspended operations in Russia just hours after Ukrainian President Volodymyr Zelenskyy appealed to the companies to cease all business operations in Russia during a video call with United States lawmakers.

Russian banks issuing cards using China’s UnionPay

Several Russian banks said on Sunday, March 6, that they would soon begin issuing cards using the Chinese UnionPay card operator’s system linked with Russia’s own Mir network, after Visa and MasterCard declared they were suspending operations in Russia, according to a Reuters report. The state-owned UnionPay is the contributor of most card payments in China.

Sberbank, Russia’s biggest lender, along with Alfa Bank and Tinkoff, made the announcements regarding the change to UnionPay on Sunday.

The move could allow Russians to make payments overseas with UnionPay operating in 180 countries and regions in the world. Visa and Mastercard stated that any transactions initiated with their cards issued in Russia will no longer work outside the country starting March 10. (Related: Bank runs begin in Russia, serving as a reminder for ALL people to question the stability of all banks around the world.)

The Bank of Russia is also temporarily decreasing the amount of information commercial banks are required to announce in an effort to limit the risks from international sanctions. Beginning with statements for February, banks will no longer have to issue accounts prepared to national standards or make any additional disclosures on their websites.

Russian citizens were informed by the central bank of Russia to use cash abroad. It said Mir cards could also be used in Turkey, Vietnam, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan and the breakaway regions of South Ossetia and Abkhazia.

American Express suspends operations in Russia, Belarus

American Express said on Sunday that it will also suspend its operations in Russia and Belarus, becoming the newest credit card giant to respond with actions condemning Russian President Vladimir Putin’s decision to invade Ukraine.

The company said in a statement that its globally issued American Express cards will cease to function at ATMs or merchants in Russia, while cards issued locally by Russian banks will no longer function outside of the country.

American Express stated that the moves are “in addition to the previous steps we have taken, which include halting our relationships with banks in Russia impacted by the U.S. and international government sanctions.”

Visa on Saturday, March 5, said that customers in Russia who have a card issued there can still pay for goods and services in the country, but the company won’t process the transactions. The processing will be left to Russia’s National Payment Card System.

According to the Russian central bank, Visa and Mastercard products released by Russian banks will continue to function until they expire.

PayPal also announced on Saturday that it has shut down all its services in Russia due to “the current circumstances.” PayPal CEO Dan Schulman made the announcement in a letter sent to Ukraine’s Deputy Prime Minister Mykhailo Fedorov expressing solidarity with the Ukrainian people.

The global payment processors are the newest companies to join a growing list of U.S. tech and internet titans who are boycotting Russia over the Putin-ordered invasion of Ukraine that started last week of February.

Governments from the West have released a package of sanctions directed at limping Russia’s economy. Several overseas companies have also decreased their operations in Russia in response to the conflict. After sanctions were enforced following Russia’s invasion of Ukraine, the ruble has plunged, its stock exchange has shut and assets worth billions of dollars have been frozen.

China, nevertheless, has resisted denouncing Russia and has stated that sanctions are a penalty that doesn’t work. Russian businesses are also rushing to open accounts at Chinese banks in Moscow as they attempt to avoid the effect from sanctions. China is Russia’s largest trade partner for exports and imports.