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Visa, Mastercard suspend operations in Russia over Ukraine invasion

Stock Markets Mar 06, 2022 04:05AM ET
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© Reuters. FILE PHOTO: Credit card is seen in front of displayed Visa logo in this illustration taken July 15, 2021. REUTERS/Dado Ruvic/Illustration
 
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By John McCrank

(Reuters) -U.S. payments firms Visa Inc (NYSE:V) and Mastercard Inc (NYSE:MA) on Saturday said they were suspending operations in Russia over the invasion of Ukraine, and that they would work with clients and partners to cease all transactions there.

Within days, all transactions initiated with Visa cards issued in Russia will no longer work outside of the country and any Visa cards issued outside of Russia will no longer work within the country, the company said.

"We are compelled to act following Russia's unprovoked invasion of Ukraine, and the unacceptable events that we have witnessed," Al Kelly, chief executive officer of Visa, said in a statement.

U.S. President Joe Biden, in a call with Ukraine's President Volodymyr Zelenskiy, welcomed Visa's and Mastercard's decisions to suspend their operations in Russia, the White House said. [W1N2QI054]

"President Biden noted his administration is surging security, humanitarian, and economic assistance to Ukraine and is working closely with Congress to secure additional funding," a White House readout of the call added.

The move by the payments firms could mean more disruption for Russians who are bracing for an uncertain future of spiraling inflation, economic hardship and an even sharper squeeze on imported goods.

Unprecedented Western sanctions imposed on Russia have frozen much of the country's central bank's $640 billion in assets; barred several banks from global payments system SWIFT; and sent the rouble into free-fall, erasing a third of its value this week.

On Monday, Ukraine's central bank chief Kyrylo Shevchenko told Nikkei Asia https://asia.nikkei.com/Editor-s-Picks/Interview/Ukraine-urges-Visa-and-MasterCard-to-halt-Russian-cards2 the central bank and Zelenskiy urged Visa and MasterCard to halt transactions of their credit and debit cards issued by Russian banks to increase pressure on the Russian regime, the paper.

A growing number of financial and technology companies have suspended Russian operations. PayPal Holdings Inc (NASDAQ:PYPL), announced its decision earlier on Saturday.

ALTERNATIVE SYSTEM

Sberbank Rossii PAO, Russia's largest lender, said the moves by Visa and Mastercard would not affect users of the cards it issues in Russia, Tass news reported.

Sberbank said its customers would be able to withdraw cash, make transfers, pay both in offline stores and Russian internet stores because transactions in Russia pass through the domestic National Payment Card System which does not depend on foreign payment systems, according to Tass.

Russia has been taking steps to increase the independence of its financial system for years, particularly after ties with the West deteriorated over the country's annexation of Crimea in 2014.

The country set up its own banking messaging system, known as SPFS, as an alternative to SWIFT and its own card payment system MIR began operating in 2015. They were part of Moscow's efforts to develop homegrown financial tools to mirror Western ones, to protect the country in case sanctions are broadened.

Mastercard and Visa had significant business in Russia. In 2021, about 4% of Mastercard's net revenues were derived from business conducted within, into and out of Russia. Meanwhile, business conducted within, into and out of Ukraine accounted for 2% of its net revenues, according to a filing on Tuesday.

Visa also reported that total net revenue from Russia in 2021 was about 4% of its total.

Mastercard, which has operated in Russia for 25 years, said its cards issued by Russian banks will no longer be supported by Mastercard networks, and that any the company's card issued outside of the Russia will not work at Russian merchants or ATMs.

Mastercard said it decided to suspend its network services in Russia following its recent action to block multiple Russian financial institutions from the company's payment network, as required by regulators globally.

Visa also said this week it blocked multiple Russian financial institutions from its network in compliance with government sanctions imposed over Moscow's invasion of Ukraine.

Visa, Mastercard suspend operations in Russia over Ukraine invasion
 

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Comments (16)
Keng He
Keng He Mar 06, 2022 9:06AM ET
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this behavior will weak usa dollar status in the world transaction.
Shep De
Shep De Mar 06, 2022 9:06AM ET
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us dollar will weaken as recession nears. Now it's high , going higher too
Keng He
Keng He Mar 06, 2022 9:05AM ET
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putin has a plan. Russia mir credit card could replace Visa and Mastercard easily. Mir credit card occupy 50% russia credit card market.
Devin Barry
Devin Barry Mar 06, 2022 1:29AM ET
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What we are seeing here is a change on how countries need to think. The world has become so interconnected and intertwined with information, financials, commodities etc., that if the consensus of the world sees an action of another country as unjust or stepping over the line, that the information, financials, commodities can be taken away and crash that economy. Politicians need to see the domino effect of thier actions or thier own people will feel the effect and rise up against thier own govt.
Devin Barry
Devin Barry Mar 06, 2022 1:28AM ET
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What we are seeing here is a change on how countries need to think. The world has become so interconnected and intertwined with information, financials, commodities etc., that if the consensus of the world sees an action of another country as unjust or stepping over the line, that the information, financials, commodities can be taken away and crash that economy. Politicians need to see the domino effect of thier actions or thier own people will feel the effect and rise up against thier own govt.
Mehdi Captain Music
Mehdi Captain Music Mar 06, 2022 12:49AM ET
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Arab countries, be careful. USA and Britain are the powers who promised Ukraine to be safe. But you see!! They took Russian’s money into their pockets. This is not helping Ukraine
Maximus Maximus
Maximus Maximus Mar 06, 2022 12:49AM ET
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Yes, the west and russia all promised Ukraine safety, however the west did not invade them. russia did
Mehdi Captain Music
Mehdi Captain Music Mar 06, 2022 12:49AM ET
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Maximus Maximus .It is a world of WHY? There are secrets behind the scene
Shep De
Shep De Mar 06, 2022 12:49AM ET
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don't speculate too much tho, Mehdi? Are you in Egypt? We are giving billions to war weapons now, we are helping Ukraine, 32.5 billion humanitarian aid too, Biden just signed Fri. , I believe said
Mehdi Captain Music
Mehdi Captain Music Mar 06, 2022 12:45AM ET
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The United States has been sophisticating the world for 80 years. Countries clash. And the United States seeks to profit from them.
Trevor Roberts
LimitUp Mar 06, 2022 12:45AM ET
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If we need what rabid country you were from, we could have a laugh. Entertain us.
Mehdi Captain Music
Mehdi Captain Music Mar 06, 2022 12:45AM ET
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Trevor Roberts actually in 2022 most of the people are multi nations. But you are still a racist. My aims are to politics and governors. We are ordinary people.
Mehdi Captain Music
Mehdi Captain Music Mar 06, 2022 12:39AM ET
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Bilateral loss
Gary Hennessey
Gary Hennessey Mar 05, 2022 11:32PM ET
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all sanctions r a joke. they do not work and it will ***the U.S. also.
John Healy
John Healy Mar 05, 2022 11:32PM ET
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They’re such a “joke” that Vladimir Pukin refers to them as an act of war and the desperate Russian central bank doubled the interest rate to 20% as the rouble augers into the ground. I’ll gladly endure a period of higher commodity prices and lower Russian-generated corporate revenue just to watch that tiny little dicktator squirm and soil himself. The United States and a growing chorus of other countries around the world realize there’s a price to be paid. Tyrants must be sent to the gallows. PUCK FUTIN!
Maximus Maximus
Maximus Maximus Mar 05, 2022 11:00PM ET
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Sanctions can, will and must be expanded further still. Target all russian crypto, block all russian ships, embargo on all russian exports/imports including oil&gas, seize all russian assets abroad. Putin is a coward and will not attack NATOs superior forces. In fact Ukraine is already proving to be too much for him
fenix project
fenix project Mar 05, 2022 11:00PM ET
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a coward? you will be defeat and your government if you continue thinking that Russians are cowards...look APPLE, MASTERCARD...etc lost the biggest market for them, do you think latin america buy products as russians ? ha you have a little brain
Maximus Maximus
Maximus Maximus Mar 05, 2022 11:00PM ET
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Learn how to read first little fenix, then maybe criticize after. I said putin is a coward, not russians. Then saying russia is apple and mc's biggest market just shows how little you know. russia is just 1,3% of the world economy
Magic Nash
Magic Nash Mar 05, 2022 11:00PM ET
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fenix project  LOL, "Russia is the biggest market", not even close
Manoj Jain
Manoj Jain Mar 05, 2022 10:49PM ET
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plz suspend your operation from all world and windup your whole business from this planet
fenix project
fenix project Mar 05, 2022 10:49PM ET
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yeah will be the best
Mehdi Captain Music
Mehdi Captain Music Mar 05, 2022 10:49PM ET
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Yes, hey USA go back to your cage
 
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