Visa and Mastercard suspend operations in Russia

New York: Card payment giants Visa and Mastercard announced on Sunday they will suspend operations in Russia, the latest major US firms to join the business freeze-out of Moscow over its invasion of Ukraine.

“Noting the unprecedented nature of the current conflict and the uncertain economic environment,” Mastercard said it had “decided to suspend our network services in Russia.”

Visa, for its part, said that “effective immediately” it would “work with its clients and partners within Russia to cease all Visa transactions over the coming days.”

US President Joe Biden “welcomed the decision” during a phone call with his Ukrainian counterpart Volodymyr Zelensky in which the two discussed US, ally and private industry actions to deter Russia from aggression, according to a White House readout.

Major corporations across a range of industries have halted business in Russia since its invasion began on February 24, including everything from US-based tech firms such as Intel and Airbnb to French luxury giants LVMH, Hermes and Chanel.

Visa and Mastercard had already announced that they were complying with US and international sanctions imposed on Russia in the wake of its attack.

“Our colleagues, our customers and our partners have been affected in ways that most of us could not imagine,” Mastercard said, stating that its cards issued by Russian banks would no longer be supported by the company’s network.

Visa similarly said that cards issued in Russia would no longer work outside the country.

Both companies said cards issued abroad would no longer work in Russia.

“We are compelled to act following Russia’s unprovoked invasion of Ukraine, and the unacceptable events that we have witnessed,” Visa CEO Al Kelly said.

Russia’s major banks, including its largest lender Sberbank and the Russia Central Bank, downplayed the effects that the cards’ suspensions would have on their clients.

“All Visa and Mastercard bank cards issued by Russian banks will continue to operate normally on Russian territory until their expiration date,” the Russia Central Bank said.

Sberbank said in a statement on its official Telegram account that the cards “can be used for operations in the Russian territory -- to withdraw cash, make transfers using the card number, and for payment at offline as well as at online Russian stores.”

The cards would continue to work on Russian territory, it said, because all payments in Russia are made through a national system and do not depend on foreign systems.

However, the central bank warned that Russians traveling abroad should carry alternate means of payment.

Mastercard added that it would continue to provide pay and benefits to its nearly 200 employees in Russia.

Visa’s and Mastercard’s announcements came hours after PayPal also halted its services in Russia.

Ukrainian deputy prime minister Mykhailo Fedorov tweeted a letter early Saturday from PayPal CEO Dan Schulman officially announcing the stop.

“Under the current circumstances, we are suspending PayPal services in Russia,” Schulman said in the letter.

He added that PayPal would continue to support its staff in the region and would focus on “enabling our customers and our global employee community to support” humanitarian efforts in Ukraine.

Meanwhile, Japan may take more action in response to Russia’s invasion of Ukraine which could significantly impact Japan’s energy sector, a senior ruling-party lawmaker said on Sunday, while expressing caution toward a complete end to Russia oil and gas usage.

Sanctions against Moscow - such as freezing assets, banning exports of high-tech goods and excluding some Russian banks from the SWIFT international payments network - are having a major impact, said Hiroshige Seko, upper house secretary-general of the Liberal Democratic Party.

“What’s important above all is to let Russia change action,” Seko said. “There’s a possibility we may impose further sanctions, which could have ramifications for the energy sector through financial institutions involved with transactions.”

“Sanctions could have a big impact on (Japanese) people’s livelihoods, so we would have to seek their understanding for the sake of solidarity with Ukraine,” Seko told a political debate programme on public broadcaster NHK.

Russia’s invasion of Ukraine over a week ago has led to a string of big companies halting their businesses in Russia.

Russia calls its actions in Ukraine a “special operation”.

The Japanese government and companies own stakes in oil and liquefied natural gas (LNG) projects in Russia, including two on Sakhalin Island from which partners Exxon Mobil Corp and Shell PLC have announced they will exit.

“If we exit from Sakhalin 1 and 2 projects, (oil and natural gas) supply would be disrupted while countries like China who are desperate for LNG would get it cheaply,” Seko said, considering the costs Japan bore developing the projects. “We must consider it realistically.” Japan decided on Thursday to freeze the assets of four Russian banks from April 2, taking to seven the total number Tokyo has slapped with such sanctions.

The government has frozen assets of Russian oligarchs as well as Belarus President Aleksandr Lukashenko who has backed Russia’s invasion. It also decided to ban Belarus-bound exports.

The payment networks blocked multiple financial institutions in Russia from using their networks last week following the imposition of sanctions.

But Saturday’s move to block all transactions will worsen the nation’s financial isolation.

The sanctions announced last week had already caused Russians in Moscow and other cities to rush to withdraw cash from the nation’s banks on concerns that payment card services offered by Visa and Mastercard would stop working. Long queues have formed at ATMs waiting for fresh deliveries of cash and some western experts have warned about the liquidity of Russia’s banking system.

Earlier on Saturday, Zelensky called for the suspension of all commercial transactions, including by Visa and Mastercard, during a video call with US lawmakers.

During the hour-long zoom call with Senators, Zelensky thanked the US for its support but called for more military aid and sanctions to isolate Russia.

In a twitter post following the call, Senator Lindsey Graham said: “Anything that could hurt the Russian economy will help the Ukrainian people and may make this war more difficult for Putin.”

Mastercard, which has operated in Russia for more than 25 years, said that following its suspension of operations, cards issued by Russian banks will no longer be supported by its network, and any card issued outside of the country will not work at Russian merchants or ATMs.