In the last few days I’ve been reading several websites to check and verify things and not just relying on the typical news channels. Mastercard and Visa have ceased operations in Russia. Chinese UnionPay will replace them, according to TASS, the Russian news agency. Russia has the Mir network and this network will continue to process domestic transactions; Visa and Mastercard only affect international transactions: “Mir has processed most domestic payments in Russia since 2015, while foreign operators such as Visa and Mastercard continued to process international transactions. The operator, which is 100% owned by the country’s central bank, was set up by government order to protect the economy from sanctions imposed over Moscow’s annexation of Crimea in 2014.”
Consumers will still be able to use Mastercard and Visa-branded cards for domestic transactions in Russia, the country’s state-backed payments network said, reducing the impact of U.S. firms’ decision to halt services over the Ukraine invasion.
Russia’s native payments system Mir said cardholders could continue to access their funds, make withdrawals and make domestic transfers — at least until their bank cards expire.
Let me give you some numbers: In 2019, Visa and Mastercard together achieved a total transaction volume of $16 trillion worldwide; UnionPay China makes around $16 trillion. (The largest network, though not just one card, was AliPay at $18 trillion)
UnionPay handles nearly 45% of all card spending worldwide; Visa and Mastercard make up 27% and 18%, respectively.
I expect nations like India will start figuring out how to build/promote local alternatives to Visa and Mastercard. I expect India to massively promote RuPay now. Nigeria’s Interswitch Verve is also there. You never know; Say an electoral mess and Visa and Mastercard decide to back out; Verve can serve innocent citizens living far away from Abuja!
As we discussed in Tekedia Mini-MBA on Saturdaythe effects of the Russia-Ukraine conflict will be enormous and hit many companies massively. Russian companies like Yandex are already on life support. But don’t overlook the fact that companies like Visa and Mastercard are under pressure: would you just count on them if they could switch off?
Expect India, Brazil and some countries to start promoting local brands to mitigate future risks. In the last 5 days, both Visa and Mastercard have lost about 8% of their market cap.
Even more, the movement and storage of wealth will change. Since 1790, when the United States issued the first patent, it has built a property rights-first nation. In other words, the US and UK have supported property rights. In TASS, the Russian government turned the extraction against its citizens, reminding them what they told them: These property rights cannot be relied on, citing examples where Russians are now losing assets, businesses, etc. She ended by saying: move all your assets back to Russia. In it, the head of communications mocked those who lose fortunes because they keep removing Russia’s wealth from the nation.
Folks, what’s happening in the world is confused. But one thing is clear: nations need thinkers who can connect the dots. The world has changed as a result of this current conflict and many layers have been opened. The effects will be felt for years.
But as we write and analyze the events, let us remember innocent Ukrainians, and I will add innocent Russians, who will be adversely affected by this conflict. The world desperately needs peace.
Several Russian banks said on Sunday they would soon start issuing cards using Chinese card operator UnionPay’s system in conjunction with Russia’s own Mir network, after Visa and MasterCard said they were ceasing operations in Russia .
Announcements regarding the move to UnionPay came from Sberbank (SBER.MM), Russia’s largest lender, as well as Alfa Bank and Tinkoff on Sunday.
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