America’s blacklisting of several Russian banks—the result of sanctions imposed in the wake of the Ukraine crisis—and the temporary suspension of services by MasterCard and Visa to sanctioned Russian banks has resulted in a new law to accelerate the building of a new national payment system.
Alya Guseva, an associate professor in Boston University’s sociology department and co-author of Plastic Money: Constructing Markets for Credit Cards in Eight Postcommunist Countries, is skeptical of promises to get Russia’s new payment system up and running in six months. She says the debate surrounding the creation of a national payment system in Russia has gone on for almost 20 years with little progress.
It will be difficult for Russia to circumvent Visa and MasterCard. According to Guseva, 85% to 90% of all cards issued in Russia bear Visa or MasterCard logos. “That means that the majority of ATM and POS terminals are also configured to the EMV (Europay, MasterCard and Visa) standards,” she says. Prior to Visa and MasterCard’s dominance, Guseva says, the Russian payment card scene was fragmented among several competing domestic card brands using divergent technologies. Nonstandardization precluded cooperation. The problem, she says, remains.
“Even with coercion, the continuous presence of multinationals may mean that the new national payment system will be marginal at best,” says Guseva. “It would be a different story if Visa and MasterCard [were to] exit Russia: Russia has just passed regulations that require the two multinationals to provide collateral close to $2 billion each—25% of the total daily transaction value paid each quarter to the central bank.”
National payment system cards are likely to support only ruble transactions and would not work abroad. “In this case, we would either see a return to cash or an attempt to tie the national card with another network that would support Russian cardholders’ transactions abroad,” says Guseva. “Enter the Chinese, who have already been phenomenally successful in building their national payment system, UnionPay.”