Following sanctions and frozen local accounts placed by Visa and MasterCard, China UnionPay will start offering card services in Russia.
Following rumors of an alleged local card and payment scheme, China UnionPay card will begin to trickle into the region, with an estimated 2 million cards to be issued within the next 3 years. The majority of Russia’s banks, VTB- Gazprombank, Promsvyazbank, Alfa Bank, MTS, and Rosbank are already preparing their systems to support the new card type.
Visa and MasterCard were forced to freeze out Russian accounts in March 2014 following sanctions from the US government regarding Russia’s involvement in the crisis in Crimea.
Started in 2002, China UnionPay quickly grew from a local payment option to international card firm boasting the most cards in circulation with a 34% global stake hold.
“VTB24 already serves China UnionPay cards in its ATM network and now the bank is in negotiations with this payment system to start acquiring retail merchants,” a press release fromVTB24’s stated.
Initial rumors stated China UnionPay would setup a national payment scheme, serving as Russia’s national payment method. No word yet on such plans, or if China UnionPay is compliant with the new regulations and restrictions instilled by the Russian government, regulations and restrictions that may prevent Visa and MasterCard from being fully operational in the area.
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As of now, a total of 20,000 cards have been issued in Russia with an order for an additional 100,000 China UnionPay cards to be supplied in September. While local banks have begun to support the new payment cards, merchant support is still scarce.
Sources state the new cards are intended to help Russia ease its dependency on western companies primarily Visa and MasterCard. Plans for an official payment scheme are said to be 16 months-3 years away.
This is not China UnionPay’s first foray into international payments. The Chinese card firm currently operates in a total of 142 countries.