China's 'UnionPay' Emerges as an Alternative to Russian Banks... Sanctions Evasion Intensifies

Visa, MasterCard, and Amex All Announce Service Suspension in Russia
"Chinese Payment Systems Also Rely on SWIFT"...Concerns Over Limitations of Workarounds

[Image source= UnionPay International website]

[Asia Economy Reporter Hyunwoo Lee] As the world's top three card companies?Visa, Mastercard, and American Express (Amex)?have all announced the suspension of their services in Russia, China's 'UnionPay' is emerging as a new alternative for Russian banks. However, concerns are also being raised that if Western sanctions are further tightened, indirect sanction evasion methods could also be blocked.

According to TASS news agency on the 6th (local time), the Central Bank of Russia stated that major Russian banks such as Sberbank, Alfa Bank, and Tinkoff Bank are considering issuing cards based on China's UnionPay. This is analyzed to be because all major card companies like Visa, Mastercard, and Amex have announced the suspension of their services in Russia, resulting in restrictions on overseas payment cards.

The Central Bank of Russia said, "These cards can still be used domestically through Russia's own payment system, Mir, but overseas payments are currently impossible." Mir is a domestic payment system created by Russia in 2015 after its invasion of Ukraine's Crimean Peninsula, and it is only usable within Russia and partner countries such as Turkey, Vietnam, and Armenia.

Earlier that day, Amex announced in a statement that "Russia is carrying out unjust attacks against the people of Ukraine" and declared the suspension of its services in Russia. The day before, Visa and Mastercard also condemned Russia's invasion of Ukraine and announced the suspension of their services in Russia. It is estimated that the overseas payment share of these three major card companies in Russia is about 74%, effectively blocking overseas payments.

UnionPay, which Russian banks are considering as an alternative, is a payment system operated by China UnionPay headquartered in Shanghai, China, and is currently available in 180 countries worldwide. The Chinese state-run Global Times also reported that "several Russian banks, including the Central Bank of Russia, have announced the switch to UnionPay, and some smaller banks are already cooperating with UnionPay."

However, there are concerns that China's payment systems, including UnionPay, may also become difficult to use as indirect routes if Western sanctions are further strengthened. The Wall Street Journal (WSJ) pointed out that "China is also developing its own payment system, but it still relies on the international financial messaging network (SWIFT) for most payments."

This content was produced with the assistance of AI translation services.