Visa, Mastercard Block Russian Financial Institutions

The two leading American payment card giants, Visa and Mastercard, have complied with US sanctions against Vladimir Putin’s Russia.

Both firms have blocked multiple Russian financial institutions from their network, Reuters has reported.

The move is another heavy blow for Russia’s reeling economy after its exclusion from the SWIFT payment system. Since 2015 Russia has been building its own alternative payment system (Mir), which has a long way to go before it match its Western rivals.

Financial block

Indeed, it is reported that Mir only has a market share of 30 percent in Russia.

Visa meanwhile was quoted by Reuters as saying on Monday it was taking prompt action to ensure compliance with applicable sanctions.

It also reportedly said it will donate $2 million for humanitarian aid.

Mastercard also reportedly promised to contribute $2 million.

“We will continue to work with regulators in the days ahead to abide fully by our compliance obligations as they evolve,” Mastercard was quoted as saying in a separate statement late on Monday.

Reuters quoted a Mastercard regulatory filing on Tuesday, which showed that during 2021, about 4 percent of Mastercard’s net revenues were derived from business conducted within, into and out of Russia.

That same filing showed that business conducted within, into and out of Ukraine accounted for 2 percent of its net revenues.

The US government sanctions require Visa to suspend access to its network for entities listed as Specially Designated Nationals, a source familiar with the matter told Reuters.

The United States has added various Russian financial firms to the list, including the country’s central bank and second-largest lender VTB.

It comes after the US, UK, Europe and Canada at the weekend announced new sanctions on Russia – including blocking certain lenders’ access to the SWIFT international payment system.

Starting to bite

And the global sanctions against Russia are starting to hurt.

Russia’s stock exchange has been closed for four days since Monday, its longest pause since 1998.

Russia has been trying to prop the Ruble, but it is not working, as the Russian currency has plunged more than 30 percent after the SWIFT ban.

As a result, ordinary Russians have flocked to ATMs and waited in long queues to withdraw cash, amid worries that bank cards may cease to function.

Earlier this week, Russia was also cut off from Apple Pay and Google Pay, which means that ordinary Russians can no longer use their banks card with Google Pay and Apple Pay.