After Visa, Mastercards, China's Unionpay suspends operations in Russia
Beijing (China), April 23: In the midst of the ongoing war between Russia and Ukraine, China's largest credit card brand Unionpay has become the latest financial services network to suspend its operations in Russia.
Earlier, payment giants Visa and Mastercard closed down their services in the country fearing the devasting sanctions.
According to media reports, the payment processor is reportedly worried about being the target of sanctions from the U.S. and other countries if it works with sanctioned Russian banks. These sanctions may include being prohibited from doing business with an American individual or company, or importing goods to or exporting goods from the U.S.
Effectively, the sanctions could bar UnionPay from the global financial system, which is far more lucrative than Russia's domestic scene. Launched in 2002, Unionpay is a state-led financial services network operated by China's central bank, the People's Bank of China. It is the world's second-largest card brand with a 32 percent market share, as per the 2020 data from the Nilson Report.
On Wednesday, Russian newspaper RBC reported that UnionPay, the Chinese state-led financial services network, had halted negotiations with Russian banks on issuing new bank cards for their customers, now unable to make purchases outside Russia due to Visa's and Mastercard's withdrawal.
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Notably, Russians could still use the cards to make domestic purchases, owing to Russia's local Mir payment system.
The G7 leaders have already agreed to a ban on new investments in critical sectors of the Russian economy.
When Russia's invasion of Ukraine forced payment giants Visa and Mastercard to cease operations in the nation, Moscow anticipated that it could rely on the Chinese alternative, UnionPay, to patch the voids in its domestic banking system. The plan, however, appears to have failed, as UnionPay has apparently opted not to expand its footprint in the country.
According to Bloomberg, both the Bank of China and the Industrial and Commercial Bank of China, two of China's largest lending banks, have stopped offering clients financing options for purchases of Russian commodities.
Meanwhile, China has officially refused to join Western sanctions on Russia, deeming them counterproductive to the peace process. Chinese officials have further blamed the U.S. and Western organisations like NATO for escalating tensions between Russia and Ukraine.
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-PTC News
