Russian Banks Turn to China’s UnionPay as Visa, Mastercard Cut Business

Russia’s invasion of Ukraine has resulted in multiple sanctions. It has also resulted in many international brands of US origin cutting ties with businesses of Russian origin. In an effort to pressurize the country into ceasing its invasion of Ukraine, MasterCard and Visa have cut ties with banks from the country. This means that Russian banks can no longer use Visa or MasterCard as their payment system. Card holders will therefore no longer be able to withdraw money or make payments using cards that are on the Visa or MasterCard platform. 

Attempts to cripple Russia’s economy 

The move by MasterCard and Visa are amongst multiple efforts by the US, NATO and the EU to cripple the Russian economy and force the country to withdraw from Ukraine. One of the first moves by these allies was to remove several Russian banks from the global SWIFT system. This prevents Russian banks from transferring money internationally. 

The latest move by western financial companies has seen the halting of services such as PayPal, Mastercard and Visa in Russia. This means that Russians that used cards with Visa or Mastercard will not be able to access their money through ATMs or make transactions using their cards. 

Cryptocurrencies offering an alternative 

In the midst of the conflict and multiple sanctions, the Russian ruble has suffered greatly and continues to take a dive. There is a lot of speculation that Russians will turn to cryptocurrencies as an alternative. However, the Russian Central Bank continues to hold its stand against cryptocurrencies. While Russia has not banned the use of cryptocurrencies, the Central Bank of Russia will not allow Russians access to cryptocurrencies. The CBR is doing this in an effort to prevent further decline in the ruble’s value. 

Following the withdrawal of services by MasterCard and Visa, Russian banks have now turned to China’s UnionPay, also known as UPI or CUP. UnionPay already has a good majority of the market share. It currently operates in 180 countries and even already serves several financial institutions from Russia. The move by Russia to have all their banks served by UnionPay will give the payment system an even larger share of the market. It will also restore access to overseas payments by Russians. 

With the Russian government discouraging the use of cryptocurrencies by its citizens, the move to China’s UnionPay offers  great relief to its citizens. However, it still doesn’t resolve other issues related to the fall in value of the ruble. Many Russians still find cryptocurrencies to be an attractive option for hedging their wealth against losses expected with the downturn in the Russian economy. Many would like to access stablecoins such as USDT or Bitcoin and other successful alt coins in order to avoid losing their wealth as a result of the war. Predictions about an increased demand for crypto in the country will more than likely become true.