Skip to content
Russia rolls over in deal with Visa and MasterCard

Russia rolls over in deal with Visa and MasterCard

Visa and MasterCard have reached a compromise agreement with Russian officials that would allow the global card payment companies to continue operating in the country.

“MasterCard and Visa will continue business in Russia,” said Andrew Torre, Visa’s general

Visa MasterCard logo

Preliminary Agreement Reached to Allow Global Card Payment Companies to Operate in Russia

director for Russia.

Russia’s finance minister, Anton Siluanov, said both Visa and MasterCard are ready to create their own Russia-based payment operators, which will take around a year and half. Until then, the two companies have agreed to cooperate with Russia’s existing payment systems, Mr. Siluanov said.

“They are ready to work within the framework of the new law, and we are ready to cooperate with them and will find a solution,” Mr. Siluanov told reporters.

Ilya Ryaby, the head of MasterCard in Russia, said the companies’ proposals were taken positively by Russia’s government and that both sides have reached preliminary agreements, without elaborating.

When asked if MasterCard would continue business in Russia, Mr. Ryaby said “we will stay in Russia anyway.”

In March, some Russian banks faced disruptions to bank card payments with Visa and MasterCard after the U.S. enforced sanctions in response to Russia’s annexation of Crimea.

In an effort to avoid further disruption to card payment operations, Russia’s parliament passed a law that would force the Visa and MasterCard to keep hundreds of millions of dollars at the Bank of Russia as collateral against any future freeze.

The law envisages that Moscow could confiscate 25% of the companies’ average daily turnover in Russia in the past quarter if their services are suspended again.

Visa and MasterCard officials have said the new legislation, which will come into force on July 1, will dent their profits. The law also stipulates that all the card operations in Russia should be cleared within its borders through a national payment system.

Mr Siluanov said Visa and MasterCard currently “have problems” with the insurance deposit demanded by the law, but that both sides would seek a solution. Earlier this week, Mr. Siluanov said that Russian cardholders should be ensured against possible service disruptions.

A finance ministry official who asked not to be named said Thursday that Russia hopes to reach an agreement with Visa and MasterCard that will result in creation of a payment system akin to existing systems in France and Turkey. In these two countries global card providers work together with their local peers, processing transactions together.

When asked if Moscow would agree to a Belarus model, the official said this option is less desirable but is acceptable. Belarus issues international banking cards and processes all the domestic transactions on its own but allows the global majors to take over processing when the card is used outside the country.

Both sides indicated Friday that there is no final decision which model will be chosen.

Russian banks have tried several times to create a local payment system, but none of them was widely successful as customers preferred globally recognized Visa and MasterCard. However, now the national payment system has the support of the Kremlin and may be created soon.

The post Russia rolls over in deal with Visa and MasterCard appeared first on Payments Cards & Mobile.

Cart 0

Your cart is currently empty.

Start Shopping