After effectively cutting Russia from the global financial chain through the suspension of the country’s banks from the international financial-messaging system, SWIFT, the current drive of sanctions is poised to deal another decisive blow on the country’s financial system.
The recent announcement by World top Payment processors, Visa and Mastercard that they are cutting off Russian financial institutions, in line with international sanctions, is really hitting customers of Russian banks very hard as they will no longer use their Visa or Mastercard- enabled bank cards across the country
It also means most citizens will effectively be unable to use the metro transportation system in major cities that use the contactless payment.
Speaking on the decision, Visa said it has watched the “tragic scenes in Ukraine with deep sadness and disbelief” and is taking “prompt action” to ensure the company complies with sanctions against Russia”
In a similar statement, Mastercard said it has blocked “multiple financial institutions” from its payment network in response to sanctions.
Both payment firms said they would continue to work with regulators to implement any further sanctions and each pledged to donate $2 million to Ukraine relief aid.
Russia’s invasion of Ukraine triggered an array of sanctions from governments around the world targeting Russian government, businesses, financial institutions and high-profile individuals.
Now Losing the world’s top payment networks has added more chaos to the Russian economy as its consumers are feeling the impact of the harsh Western sanctions. The central bank of Russia has also imposed strict capital controls to prevent people from moving their money out of the country.
These measures by Visa and Mastercard have effectively unplugged Russia from international and inter-city financial system and have further crippled its economy, plunging the Ruble to a record low and prompting queues outside banks and ATMs as people try to withdraw cash in case limits are put in place. Many are intending to convert their savings to more stable currencies like the euro or U.S. dollar to protect their savings as fears over their currency mount.