Visa and Mastercard said on Saturday that they will suspend operations in Russia, dealing a new blow to the country’s financial system in the aftermath of its invasion of Ukraine.
The decision came after Ukraine’s president, Volodymyr Zelensky, made a request earlier on Saturday, and it threatens to further isolate a Russian economy already besieged by crushing financial sanctions and a slew of corporate boycotts.
Based in San Francisco Visa said in a statement that it will start working with clients and partners in Russia right now to halt all transactions in the coming days. Transactions made with Visa cards issued in Russia will no longer work outside the nation, while cards issued elsewhere in the globe will not work within Russia once the process is done.
Al Kelly, chairman and chief executive officer of Visa Inc. stated: “We are compelled to act following Russia’s unprovoked invasion of Ukraine and the unacceptable events that we have witnessed.” “We regret the impact this will have on our valued colleagues, and on the clients, partners, merchants and cardholders we serve in Russia. This war and the ongoing threat to peace and stability demand we respond in line with our values,” he added.
Despite the launch of sanctions, credit card companies barred various financial institutions in Russia from utilizing their networks last week.
However, Saturday’s decision to halt all transactions will exacerbate the country’s financial isolation.
Russians in Moscow and other cities have already rushed to withdraw cash from the country’s banks, fearing that Visa and Mastercard payment card services will stop working as a result of the sanctions announced last week. Long lines have formed at ATMs, waiting for new cash delivery, and some Western experts have expressed concern over Russia’s financial system’s liquidity.
During a video chat with US legislators earlier on Saturday, Zelensky asked for the halt of all commercial transactions, including those involving Visa and Mastercard.
During the hour-long conference call with Senators, Zelensky thanked the United States for its help but demanded additional military aid and sanctions to isolate Russia. Senator Lindsey Graham remarked on Twitter after the call, “Anything that could hurt the Russian economy will help the Ukrainian people and may make this war more difficult for Putin.”
Cards issued by Russian banks will no longer be supported by Mastercard’s network, and any card issued outside of Russia will not work at Russian businesses or ATMs, according to the company, which has been operating in Russia for more than 25 years.
“We don’t take this decision lightly,” the company said in a statement, adding that it reflected “the unprecedented nature of the current conflict and the uncertain economic environment”.
The company said it will restore operations “when it is appropriate, and if it is permissible under the law.”
Mastercard said it will stay alert to maintain the safety and security of the global payments ecosystem and its network, despite concerns that the businesses could face retaliation from Russian hackers as a result of their actions.
“Our cyber and intelligence teams will continue to work with governments and partners around the world to ensure that stability, integrity and resiliency of our systems continue to guide our operations and response to potential cyber attacks,” said the company.
Earlier on Saturday, PayPal announced it would shut down all its services in Russia.
“Under the current circumstances, we are suspending PayPal services in Russia,” said chief executive Dan Schulman. “PayPal supports the Ukrainian people and stands with the international community in condemning Russia’s violent military aggression in Ukraine.”