Russia’s biggest banks are scrambling to switch to a Chinese card system after global payment giants Visa and Mastercard suspended operations in the country as part of efforts to isolate Moscow from Western financial structures.
Sberbank and Alfa Bank plan to use China’s UnionPay system to provide customers’ bank cards after Visa and Mastercard became the latest companies to join the corporate boycott of Russia in response to its invasion of Ukraine.
The switch to UnionPay will add to signs that the world’s financial system is splintering, with Moscow and Beijing challenging the hegemony of Western banking infrastructure.
Many Russian banks were also ejected from the global payments messaging system Swift, stoking fears many will turn to alternatives such as China’s CIPS.
Sberbank and Alfa Bank said the UnionPay network will be coupled with Russia’s own state-backed Mir payment system, which was set up in response to Western sanctions following the annexation of Crimea in 2014.
Rosbank, Tinkoff Bank, and the Credit Bank of Moscow are also planning to issue UnionPay cards, according to Russian news.
On Saturday, Visa and Mastercard announced they would suspend operations in Russia following pressure from Ukrainian president Volodymyr Zelensky.
Russians rushed to withdraw money from cash machines last week amid fears of a full-blown bank run following a wave of sanctions on the country’s banking sector.
State-owned Sberbank, the country’s biggest bank, said: “Sberbank is working on the possibility of issuing co-branded Mir-UnionPay cards. We will inform you later about the timeframe for the issue.”
Visa and Mastercard cards issued in Russia will not work outside the country while cards from elsewhere cannot be used within Russia.
Russia’s central bank said the cards using Visa and Mastercard will stop working abroad after Wednesday but that cards already issued by its banks will still work inside the country.
The two American firms – which together manage 90pc of transactions outside of China – had already blocked several Russian financial institutions from their network.
UnionPay is the dominant payments handler in China but still has a very small market share outside the world’s second-largest economy.
Russia’s Mir system was set up to rival Visa and Mastercard with its market share growing to 30pc.
It was created by Russia’s central bank after Moscow decided to become less reliant on Western providers in the wake of sanctions in response to the annexation of Crimea.
