After close to a year’s struggle with authorities in Russiaover the suspension of service due to the Western sanctions in the wake ofRussia’s annexation of Crimea in the Ukraine, MasterCard has announced thecompletion of a processing deal with authorities.
Under the agreement, MasterCard will gradually transfer alltransactions to the National System Of Payment Cards with the Bank of Russiacarrying out settlement services. The new network created in order to protectthe Russian payment system from further suspension will see MasterCard obligedto switch processing to the new system in order to avoid handing over a massivesecurity deposit. Visa is expected to announce a new deal with Russianauthorities in the near future.
Caught between a rock and a hard place is no ideal positionfor Visa and MasterCard in Russia, which unfortunately are at risk ofcollateral damage in the ongoing struggle between Russia and the United States.While Visa and MasterCard face an uncertain and undoubtedly more difficult operatingenvironment in Russia in the future and look to miss out on Russia’sfast-growing, yet relatively untouched electronic payments potential.
Overview by Tristan Hugo-Webb, Associate Director, Global Payments for Mercator Advisory Group