MasterCard and Visa to limit Russia operations

MasterCard and Visa to limit Russia operations

International card companies Mastercard and Visa have disconnected a number of Russian banks from their payment systems following “sanction orders” related to Russia’s ongoing military operation in Ukraine.

“As a result of the sanctions orders, we have blocked several financial institutions in the Mastercard payment network. We will continue to work with regulators in the coming days to fully comply with our obligations,” Mastercard CEO Michael Mibach said in a statement on Tuesday.

The card company did not specify which institutions will be cut off, but Washington last week announced a list of Russian banks which fall under the sanction orders. These include VTB, Otkritie, Sovcombank, Promsvyazbank and Novikombank. Their assets and dollar accounts were blocked, and Apple Pay and Google Pay for the cards of these banks stopped working.

Restrictions were also placed on Sberbank, but they fell short of freezing its assets – instead, only correspondent accounts of the bank will be closed.

Gazprombank, RSHB, Alfa-Bank, and Credit Bank of Moscow were subject to sectoral sanctions, with only a few restrictions.

According to RBC, Mastercard notified banks that fell under blocking sanctions that they were suspending their participation in the system on February 26.International payment system Visa also announced on Tuesday it would be taking “prompt measures” to enforce Ukraine-related sanctions, however, it has not yet specified the details.

According to the sanction orders, clients of sanctioned banks will not be able to pay with their Visa and Mastercard cards abroad and on foreign websites. However, the cards will continue to work in Russia, since payments within the country are processed via the internal National Payment Card System (NSPK), created in 2014.

Tuesday’s announcements from the card companies come a day after the head of the National Bank of Ukraine Kirill Shevchenko called on Visa and Mastercard to stop servicing Russian banks from their payment systems.

Russia launched a military operation in Ukraine last week at the request of the two breakaway Donbass republics, which Russia recognized on February 24. The leaders of the republics urged Moscow to step in and defend their people from what they see as pro-Kiev nationalists who have been terrorizing the region since 2014. Many Western states, however, see Russia’s moves as “unprovoked” aggression and have introduced new sanctions against Russia’s economy. The restrictions have been gradually expanding over the past few days, with new penalties introduced each day.

For more stories on economy & finance visit RT's business section

Source: www.rt.com

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