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The siege on Russia grows, more companies stop providing service
Russia is increasingly isolated, every day there are more companies that are stopping providing services to this country. On this occasion, we have some international companies such as Visa, Mastercard and American Express.
This fence that is being created around Russia is increasingly suffocating its economy. The goal is to get Putin to desist and stop the invasion of Russia. As the days go by, it is likely that more and more companies will join this.
Visa and Mastercard stop providing service to Russia
Last Saturday, March 5, Visa and Mastercard companies announced that they will suspend their services in Russia. Both companies assured that in the next few days, all the operations they carry out will be stopped.
This means that Russians will not be able to access these means of payment which include debit cards, credit cards and sales terminals. These two companies cover more than 70% of the transactions carried out in the country.
This means that it is going to be a very hard blow for the Russian economy, which is why the country's banks are already looking for alternatives to alleviate this situation. In this way, these two companies join PayPal and other companies that have left the country.
American Express has also announced its departure from Russia
This Sunday, March 6, another of the large payment processing companies has announced the cessation of operations in the country. This is how American Express also joins Visa and Mastercard in suspending services in the country.
However, on this occasion, the company has also stopped operating in Belarus, a country that has allowed Russian troops to access Ukraine from its borders.
What consequence will this suspension have?
As mentioned, these measures taken by the companies mean that all operations using their networks will be suspended. However, this does not mean that all operations within the country will stop.
As some of the most important banks in Russia have informed their clients, this measure does not affect payments within the country. In other words, Russian citizens will be able to continue using their cards normally until their expiration date.
This is because the country does not depend on the network of these companies to carry out transactions, but rather it is a local system. However, those people who travel from another country and are going to use a foreign card in the country will not be able to.
Similarly, cards issued in Russia cannot be used abroad either. That is why banks have urged citizens who are abroad, they should find an alternative payment method.
What alternatives does Russia have?
Due to these sanctions, the country will not be able to continue issuing cards under the Visa, Mastercard or American Express brand. This means that the country will have to look for alternative payment methods.
One of the easiest options that the country has is to resort to Union Pay, a service similar to that offered by Visa or Mastercar, but this is Chinese. As is well known, China quietly supports Russia. Although it has not manifested itself in its favor, it has not done so against it either.
These two countries have very important trade relations, so it is unlikely that he will join the sanctions.
Another option that the country has is to set up its own payment system, however, due to the current economic situation in the country, this is unlikely to happen. So resorting to Union Pay is the most viable option at the moment.
The impact on the Russian economy
It is clear that this movement of these two important companies will have an effect on the economy. Since the beginning of the invasion in the country, the Russian economy has been going through a serious crisis. The Ruble has been devalued by more than 30%, which has caused the inhabitants to lose a good part of their purchasing power.
In fact, according to JP Morgan, the Russian economy could contract up to 7% due to the situation it is going through. This is a heavy weight for Putin to bear, as he does not seem interested in stopping the invasion.
It is clear that Russia does not gain anything with this invasion, on the contrary, it is losing a lot and the greater weight of the sanctions will be felt in a few months. So Russia finds itself between a rock and a hard place and is unlikely to come off well.
