Visa and Mastercard suspend Russian banks3 min read
“I always pay with my phone but that just doesn’t work now… the tube barriers are operated by VTB Bank. Now that this is being sanctioned, you can’t pay for a subway ticket with either Google Pay or Apple Pay,” a Russian reported BBC. Many people would feel that even shopping in stores could no longer be done using these payment methods.
The reason for the shutdown of the services in Russia is that Visa and Mastercard also announced that they would sanction the same banks that had previously been blocked by other payment systems and banks. This means that Apple Pay and Google Pay can no longer be used by users of these banks. Apart from that, however, more and more private companies are withdrawing their offers in Russia.
Market share of the two American payment service providers has increased in recent years due to a Russian company “Mir” removed and they still accounted for about two-thirds of the credit card business.
Visa and Mastercard are behind the government course
In a press release dated March 1, 2022, Visa stated:
Visa will take immediate action to ensure compliance with applicable sanctions. We are prepared to implement further sanctions that may be imposed.
“A message from Visa”, March 01, 2022
A day earlier, Mastercard had already pledged its support for the sanctions:
Due to sanctions orders, we have excluded several financial institutions from the Mastercard payment network. We will continue to work with regulators over the coming days to fully honor our compliance obligations.
Mastercard statements February 28, 2022
In addition, both companies would have each donated two million US dollars. While Visa donated a large part to the UNICEF charity, Mastercard sent the money to the Red Cross and the NGO Save the Children.
Visa and Mastercard also provide the infrastructure for large crypto exchanges. Some exchanges, like Kraken or Coinbase, however, have announced that they cannot exclude Russian accounts or users from their products without legal requirements. So far, the companies have not commented on questions about the extent to which Visa and Mastercard could withdraw the infrastructure from the crypto exchanges.
What are the Russian people doing now?
With the sanctions imposed by Mastercard and Visa, the Russian population’s hands are increasingly being tied to continue with their everyday payment habits. As a result, more and more private individuals are having to resort to using cash. But the lines at the machines are long. Many try to withdraw their money in US dollars or euros. According to media reports, however, the capacities of these currencies in Russia are very limited. According to the government, the ruble will continue to be available. Its only problem is that it is losing value dramatically due to global sanctions.
At the same time, it seems that many Russians are investing their money in cryptocurrencies. For the country’s elite in particular, this could be a way of protecting their wealth from devaluation. how glassnode documented, the number of addresses with BTC assets in excess of 1,000 BTC has increased significantly over the past few days. At a current rate of around EUR 39,000 per BTC, each of these addresses holds almost EUR 40 million or more than 4.5 billion Russian rubles.