The news: Sberbank and other Russian banks are looking into issuing cards with local payments network Mir and China-based card network UnionPay to combat Mastercard and Visa suspending services in the country, per Bloomberg.
Key context: Mastercard and Visa blocked several Russian banks from their networks last week to comply with government sanctions following Russia's invasion of Ukraine. Both firms went a step further on Sunday, suspending all operations and transactions in Russia.
Visa- and Mastercard-branded cards issued by Russian banks will work inside the country until they expire, according to the Russian central bank. But those cards will stop working on foreign websites and transactions abroad from March 10, 2022, per Visa and Mastercard. Visa and Mastercard cards issued outside of Russia will also stop working within the country.
Why it matters: Pulling out of Russia could cost Visa and Mastercard millions of dollars—but it also poses a major problem to Russian banks.
What this means for UnionPay: New business from Russian banks could bolster UnionPay’s effort to expand its global footprint.
Considering China is one of the few countries to maintain a relationship with Russia since the attack on Ukraine, it’s unsurprising Russian banks would approach the state-affiliated UnionPay as Western payments firms sever ties with Russia.
Related content: Here’s everything you need to know about how the Russia-Ukraine conflict is reshaping the global payments landscape.