Russia is a country that is increasingly embracing payment cards as a means of payment. This is in line with Russia’s trend of modernizing its economy and society. In the past, Russia was predominantly a cash-based society. However, this is changing, particularly in urban areas. Payment cards are now widely accepted in Russia, and many businesses have started to support them. There are a number of reasons for this change. First, payment cards are more convenient than cash. They allow people to make purchases without having to carry large amounts of cash with them. Second, payment cards are safer than cash. They can be used if there is a problem with the ATM or if the ATM runs out of cash. Finally, payment cards can be used to earn rewards points, which can be redeemed for discounts or other benefits.
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Data for today’s episode is provided by Mercator Advisory Group’s Viewpoint: Russian Credit Cards Will Lose Relevance as Their Economy Tumbles
How the Russian National Payment Card System Clears and Settles Payments Post-Sanctions
- The Russian National Payment Card System (NSPK) clears and settles payments between consumers, merchants, and banks.
- 1) The cardholder tenders their card to the merchant.
- 2) The merchant sends transaction information to the acquirer.
- 3) The acquirer sends the information to NSPK, the Russian national payment switch.
- 4) NSPK clears and settles to the bank.
- 5) The disposition flows back in reverse order.
Russia was primarily a cash economy until 2012, when payment cards began to displace cash. Recent global events indicate that domestic card usage will continue, with growth in debit transactions, but credit card volumes will languish.
Russia’s domestic payment scheme will keep transactions flowing within the country. Still, it faces challenges in global acceptance and will not be capable of supporting a robust credit card function as the economy weakens as a result of the international sanctions.