Visa and Mastercard, two of the world’s largest payment processors, have imposed sanctions against Russia for its military invasion of Ukraine. American corporations have stated that they will cease operations in Russia, however, Russians will be allowed to use their cards within the nation.
Visa & Mastercard Suspend Operations In Russia
As part of the worldwide response to Russia’s invasion of Ukraine, payment companies Visa and Mastercard have suspended businesses in Russia. The financial services organizations located in the US said on Saturday that they will work with clients and partners to terminate transactions via their systems.
“All transactions begun using Visa cards issued in Russia will no longer function outside the nation, and any Visa cards issued by financial institutions outside of Russia will no longer work within the Russian Federation,” Visa said after taking the appropriate procedures.
“We feel forced to act in response to Russia’s aggressive invasion of Ukraine and the inexcusable actions we have watched,” said Al Kelly, CEO of Visa Inc. He also expressed remorse for the impact on Visa’s Russian clients, partners and cardholders.
Mastercard’s services are also being suspended in Russia. “The world has observed the horrific and catastrophic events coming from Russia’s invasion of Ukraine for more than a week,” it stated in a statement. Mastercard stated that it has lately excluded a number of financial institutions from its payment network due to legal requirements, and went on to explain:
“The Mastercard network will no longer accept cards issued by Russian banks. Furthermore, any Mastercard issued outside of Russia will not be accepted by Russian businesses or ATMs.”
US President Biden Backs Card Restrictions
In a phone chat with Ukraine’s President Volodymyr Zelensky, US President Joe Biden praised Visa and Mastercard’s choices. He also stressed that the White House is expanding security, humanitarian and economic aid to Ukraine while working with the US Congress to gain extra financing, according to a press statement cited by Reuters.
According to Governor of the National Bank of Ukraine Kyrylo Shevchenko, Visa and Mastercard took action after Zelensky encouraged the two payment processors to suspend transactions of their credit and debit cards issued by Russian banks. The Ukrainian president demanded the sanctions in order to put further pressure on Moscow.
The current development comes after major payment and remittance service providers such as Paypal, Revolut, Wise, and Remitly, among others, declared a halt of operations in Russia. Since the start of the crisis, several sites have restricted Russian users’ access to their services.
According to Tass, Sberbank, Russia’s state-controlled and largest financial institution, the limitations would not impact the functioning of the Visa and Mastercard cards it issues in the nation. Customers will be able to use them to send money to friends and family in Russia, withdraw cash and pay for goods at both physical and online Russian retailers.
Internal transfers in Russia are handled via the country’s own National Payment Card System (NSPK), which is decentralized and not connected to any other networks. Following the invasion of Crimea in 2014, Moscow established the System for Transfer of Financial Messages (SPFS) as an alternative to SWIFT and introduced Mir cards when Visa and Mastercard refused to work with numerous Russian institutions.
