Visa, Mastercard, And AmEx Follow Through on Suspending Operations in Russia

As Russian armed forces continue their assault on Ukraine, Visa Inc., Mastercard Inc., and American Express Co. late Saturday said they are suspending all operations in Russia, following up on actions taken by the networks nearly a week earlier. Meanwhile, reports began to filter out of Russia that at least some banks there may be considering using the China UnionPay network as an alternative to the U.S.-based systems.

Mastercard Inc. said all Mastercard-labeled cards issued by Russian banks will not work on the network, and cards issued outside the country will not work at ATMs or merchants inside Russia. Simply put, “we have decided to suspend our network services in Russia,” Mastercard’s statement said.

Also late in the afternoon Saturday, Visa Inc. said that “effective immediately” it is working with partners in Russia to “cease all Visa transactions over the coming days.” The statement goes on to say that, once this action is complete, “all transactions initiated with Visa cards issued in Russia will no longer work outside the country and any Visa cards issued by financial institutions outside of Russia will no longer work within the Russian Federation.”

AmEx’s statement Sunday echoed Visa’s. Chairman and AmEx chief executive Stephen Squeri cited “Russia’s ongoing, unjustified attack on the people of Ukraine.”

The latest actions by the networks widen moves they made earlier to shut down processing by banks in Russia that had been sanctioned by the U.S. government in response to Russia’s Feb. 24 invasion of Ukraine. The latest restrictions, though, may not affect transactions that stay within Russia and rely entirely on domestic processors for bank-to-bank funds movement. These transactions may not involve use of either the Visa or Mastercard network, says Eric Grover, a consultant who follows international payments.

Also, some Russian banks appear to be viewing China UnionPay as a replacement payment network. Sberbank and Tinkoff Bank are looking into joining the China-based system, according to an Associated Press report early Monday. UnionPay is a 20-year-old network based in Shanghai.

Visa derived $964 million in net revenue from Russia in its fiscal 2021, or 4% of its total, according to an 8K filing last week. It took in another $241 million, or 1%, from Ukraine. The corresponding percentages for Mastercard are 4% and 2%, according to an earlier filing by that company.

“We are compelled to act following Russia’s unprovoked invasion of Ukraine, and the unacceptable events that we have witnessed,” Al Kelly, chairman and chief executive of Visa Inc., said in a Saturday statement. “We regret the impact this will have on our valued colleagues, and on the clients, partners, merchants, and cardholders we serve in Russia. This war and the ongoing threat to peace and stability demand we respond in line with our values.”

In its own statement, Mastercard said, “We don’t take this decision lightly. Mastercard has operated in Russia for more than 25 years. We have nearly 200 colleagues there who make this company so critical to many stakeholders. As we take these steps, we will continue to focus on their safety and well-being, including continuing to provide pay and benefits. When it is appropriate, and if it is permissible under the law, we will use their passion and creativity to work to restore operations.”