Russia plans launch of payment system after Visa/MasterCard sanction debacle
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Russia is expected to launch its own nationwide card payment and processing system within months, potentially breaking the dominance of US companies Visa and MasterCard for making electronic payments in the country.
The suspended services affected Bank Rossiya, Sobinbank, SMP Bank and Investcapitalbank.
The US governments sanctions, in retaliation of Russias annexation of Crimea, are targeted at hurting Russian president Vladimir Putins inner circle, many of which include oligarchs and businessmen. SMP Bank, for instance, is owned by Arkady and Boris Rotenberg, brothers and billionaires with close links to Putin.
The suspension of Visa services on SMP Bank was lifted earlier this week, as it was with the other banks.
In a statement, Visa said: Based on clarifications provided to Visa by the US government, Visa has determined that we are not required to block SMP Banks and its associates access to our network. As a result, Visa has re-established network connectivity with SMP.
The Russian parliament is reviewing and is expected to pass a law enabling the launch of the payment system, which could happen in a couple of months, says German Gref, chief executive of Sberbank, who is quoted by the Wall Street Journal.
Sberbank state-owned and Russias largest bank Uralsib, AK Bars and Moscow Industrial Bank are backing the new payment system, which is called Universal Electronic Card (UEC) PRO 100. It is not yet enabled for retail purchases and will only be used initially for the payment of public sector and some commercial services.
The payment system is technologically ready to provide national processing in the near future, says Andrey Nesterov, director of corporate communications for UEC.
He adds that a set of rules, tariffs and software governing the system is working and that those four Russian banks, which account for more than 40% of the market, are already linked to the payment system.
Consumer credit growth in Russia has grown rapidly during the past decade, but the use of credit cards in particular still lags that of developed economies. Of a population of 143 million, Euromonitor International estimates about 30 million credit cards are in circulation in Russia, the majority of which are Visa and MasterCard branded.
On Wednesday, Reuters reported that Russian finance minister Anton Siluanov said during an interview on Russian TV channel Rossiya 24 that Visa and MasterCards suspension of services made us start thinking very seriously how we can secure ourselves against this kind of cases.
He adds that the backup national payment system would operate only on Russian territory, and that we believe that there is no serious reason to say that we should abandon the existing systems, especially Visa and MasterCard, but in parallel we will begin to focus more on developing our own settlement system.