After Visa and Mastercard announced that their operations in Russia would be suspended, many Russian banks announced on Sunday that they would soon begin issuing cards using the Chinese UnionPay card operator's system combined with Russia's own Mir network. Sberbank, Russia's largest bank, as well as Alfa Bank and Tinkoff, all announced the transfer to UnionPay on Sunday.
The development has come amidst, Visa and Mastercard, both based in the United States, announced on Saturday that they were halting operations in Russia as a result of the invasion of Ukraine and that they would work with clients and partners to stop all transactions there. All transactions started with Visa cards issued in Russia will no longer function outside of the nation within days and any Visa cards issued outside of Russia will no longer work within the country, the company said in an official statement.
It is pertinent to note that Russian banks have been barred from using the SWIFT global payments system by the United States, the United Kingdom, and the European Union. SWIFT connects nearly 11,000 banks and institutions in over 200 countries, and Russia's loss of access to the system would have an impact on international cash transfers and foreign trade. Multiple Russian financial firms have also been barred from utilising Mastercard and Visa's networks.
Russians are bracing for an uncertain future of escalating inflation, economic misery, and an even tighter squeeze on imported products as a result of the payments firms' move. Unprecedented Western sanctions against Russia have frozen a large portion of the country's central bank's $640 billion in assets, prevented many banks from using the global payments system SWIFT, and put the rouble into free decline, wiping off a third of its value this week.
Russia's greater adoption of Mir
After the imposition of international sanctions in 2014, when Russia annexed Crimea, Russia has been aiming to minimize its dependency on Western payment networks. While Russians are increasingly adopting and using Mir cards, they still lag behind international competitors such as Visa and Mastercard.
