Both Visa Inc and Mastercard Inc announced earlier in the week that they would be suspending all operations in Russia over the Ukraine invasion.
In the coming days, all Visa cards issued in Russia will be blocked outside the country, and cards issued elsewhere will no longer work in Russia.
In addition to this, the company says it will continue to work with its partners and clients to stop all transactions in the country. It has now blocked several Russian financial institutions from its network earlier this week in compliance with US government sanctions.
Mastercard has also decided to suspend all its services from Russia. This follows the company’s earlier decision to block Russian financial institutions from its network, which was a legal requirement by global regulators.
The company says that cards issued by Russian banks will no longer be supported by Mastercard networks, and cards issued elsewhere will no longer work at Russian ATMs or merchants.
Both Visa and Mastercard had a significant presence in Russia. The firm has operated in Russia for 25 years. Figures from 2021 show that approximately 4% of Mastercard’s net revenues were from Russia, whilst business with Ukraine accounted for about 2% of its net revenues.
Visa has also reported that revenue from Russia accounted for about 4% of all revenue in 2021. However, a statement from Al Kelly, chief executive officer of Visa, noted, “We are compelled to act following Russia’s unprovoked invasion of Ukraine, and the unacceptable events that we have witnessed.”
The move by these two American companies has been welcomed by the White House, as it could mean more disruption for Russia. It could lead to increased uncertainty, higher inflation, rising prices on imported goods, and economic hardship.
So far, Western sanctions on Russia have frozen a huge proportion of the country’s central bank’s $640 billion in assets.
Payments have already been blocked from other global payments systems, including SWIFT, and this announcement will put more pressure on the Russian regime.
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