In the wake of the Ukraine crisis, UnionPay has announced that it will no longer accept Visa and Mastercard in the country. The move follows the decision by several international brands to stop doing business in Russia, including Netflix, Intel, and Inditex. Some Russian banks, like Alfa Bank, have also switched to the UnionPay card operator system. The switch is effective March 10 at midnight Moscow time. However, there are still some lingering questions.
The question arises: Does UnionPay card work in Russia? China’s UnionPay payment system is similar to the one used by Russians. The two companies have a close partnership, which means Russian businesses can use their UnionPay cards in China. The monopoly payment network has been in use since 2001, and the Russian branch of the Chinese-owned Tinkoff Bank opened in the country in 2015. It will enable Russians to use their UnionPay card in over 180 countries.
While UnionPay has been a global player in payments for decades, it is not widely accepted in Russia. Sberbank recently announced it would partner with Mir to expand its acceptance in the Nordic region. The company also struck similar deals with Fiserv and Stripe. The company announced in December that its global acceptance network reached 186 countries, including the EU, and that 55 million merchants accept its cards. In 2020, UnionPay plans to hold a third of the global card market and 2% of the European market.
The withdrawal of Visa and Mastercard from the Russian market is part of a larger Western strategy to isolate Russia. While Visa and MasterCard have suspended operations in Russia, China has refused to condemn the invasion, calling for dialogue and respect for national sovereignty. The large Chinese population and second-largest economy are good for UnionPay. This service is expected to operate in Russia soon, with a partnership with local MIR.
As a result of the Ukrainian crisis, Sberbank is now considering issuing cards in Russia with the Chinese UnionPay card operator, and partnering with the Mir payments network. Its plans follow the decision by Visa and Mastercard on Sunday, when the two networks suspended operations in the country. Therefore, these companies are in the process of implementing the plan to use UnionPay in Russia. It is important to note that these two companies are largely independent from each other, and they have different business models.
Russian banks have also begun to consider the UnionPay network, especially in the Nordic region. The bank has partnered with Worldline to expand its acceptance network in the Nordic region, and with the Mir network to launch cards in the country. As of today, UnionPay has expanded its global acceptance network to 180 countries. In the future, there will be 55 million merchants worldwide that accept the UnionPay card. This expansion of its network will increase its reach to the next level.
Russian banks are now planning to issue cards using the Chinese UnionPay card operator system and the Mir network, as the other two major credit card companies have suspended operations in the country. These systems have their own advantages and disadvantages. Among them is the lack of UnionPay in Russia. As of today, there are 85% of ATMs that accept the cards. This means that many banks in the country will be able to use them, including U.S.-based institutions.
As of today, most Russian banks are considering introducing UnionPay cards to their customers. Sberbank is also looking into issuing cards with the China-based UnionPay system. On Saturday, Visa and Mastercard suspended operations in the country. As a result, many Russian banks have been forced to look for other options. As a result, the US president has welcomed the decision by the Russian bank’s decision to switch to the UnionPay system.
Despite the recent problems, Russian banks are considering switching to the UnionPay system. The Chinese-based UnionPay card operator is enabled in more than 180 countries. With these changes, the situation in Russia has become more difficult to do business with the two foreign companies. While this is a good news for international banks, the ban on Visa and Mastercard may cause some confusion among their customers. But this has not stopped Tinkoff bank from introducing UnionPay cards.