Russian banks are worried about an end to the availability of Visa and Mastercard credit cards for payments in Russia and they’re reportedly looking at China’s Union Pay as a replacement system. That’s after credit-card sanctions were imposed on Russia because of the crisis in Ukraine.
Union Pay is trying to make a name for itself as a bank card association, with footholds already in the United Arab Emirates, Thailand and Turkey.
The system is hoping for 2 million credit and debit cards over the next three years and reportedly has thirty new partner banks in Russia.
Russia’s Private Lait Bank is due to soon introduce China Union Pay. The bank is having tens of thousands of the cards delivered. So we went to talk to them.
Sanctions have raised the prospect, however remote, that Visa and Mastercard transactions may be stopped in Russia.
"Every person before trusted Visa and Mastercard 100%. Now this trust is shaken and people are searching for some kind of alternative and the only available alternative now is the Chinese payment system," said Denis Fonov, from Lait Bank.
The online newspaper Gazeta.ru claims that major Russian banks including Alfa Bank, Gazprombank and the Bank of Moscow are preparing to issue the Chinese cards.
However, none of the banks have confirmed that they are actually going to go ahead with the issuance of Chinese bank cards. That’s as Visa and Mastercard still maintain market dominance and huge trust in Russia.
"For now, just over 27,000 have accepted China Union pay, and that’s incomparable with Visa and Mastercard. It will be very difficult to replace the national cards system. It will take a long time for all banks to join," Yulia Tsitova, an observer from Banki.ru.
An old ally of Russian President Vladimir Putin — Gennady Timchenko — is under U.S. sanctions and he says because of that he can no longer use Mastercard or Visa. Timchenko says he’s switched to Union Pay.
But Russia’s largest bank, state giant Sberbank, is reportedly going its own way and pursuing its own payment system.