Following new laws in Russia, card firms MasterCard and Visa are now searching for local payment systems to doge hefty security deposits.
A new bypass to a law previously legislated by the Russian Prime Minister will give the 2 largest card firms in the world the ability to continue operations in the region without leaving a calculated combined security deposit of over $2.9 billion. That amount is said to be 5 times higher than both companies’ annual revenues in Russia.
The new law will waive the security deposits to Russia’s Central Bank in favor of partnering with a local payment firm (of national importance). Exactly what that means is still unclear.
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The new laws were set in place after the Crisis in Crimea forced both MasterCard and Visa to freeze Russian accounts as the result of sanctions from the US. Since the event President Valadamir Putin has legislated a law allowing only for local payment schemes to operate in the country. Given MasterCard and Visa account for over 90% of transactions in Russia, the transition would be extremely difficult for all involved.
In addition to finding a payment firm with national importance, requirements also include that 25% of the payment infrastructure, applications and software that the systems use must be developed by Russian organizations and provided under contracts lasting at least five years.
Currently only the National Settlement Depositary, a part of the Moscow Stock Exchange group, was granted with the tile of national importance, with more planned to be added soon.
Both MasterCard and Visa have until October 31st to either find an eligible partner or submit the deposit if they intend on continuing to serve Russian cardholders.