The economic sanctions that Russia has to cope with as a result of its invasion of Ukraine are becoming more and more comprehensive. So now Visa and Mastercard, as the world’s two largest credit card providers, have also put pressure on Russia’s financial policy. Banks from Russia have now been locked out by the providers.
Payment networks closed to Russia
Anyone who currently wants to pay in Russia with a credit card from the Visa or Mastercard institutions may be looking down the tube. Finally, both credit card companies want to implement a corresponding blockade of Russian banks with immediate effect. While Mastercard announced its project already on Monday, 28.02.22, Visa agreed on the following day in the tenor. Thus one would like to support the global punitive measures, which concern above all the financial sector, actively. In doing so, both companies emphasized that one is also prepared to further, even harsher sanctions. But Visa and Mastercard do not only want to support the sanctions policy. On top of that, the credit companies have announced that they will financially support war-torn Ukraine with a total of $4 million in donations.
Russia is largely self-sufficient economically
This eliminates two other important payment options for Russia. To what extent this is the case, we do not yet know. Finally, neither Visa nor Mastercard have commented on the objectives of their bank blocks. However, the Reuters news agency was able to gather exciting insider information in this regard. They say that the block is not intended to affect the “common people” of the country. Instead, it is supposed to concern important people and organizations that are on the so-called sanctions list. We assume that the country’s oligarchs in particular will feel the effects of the block. However, since both credit companies are keeping further steps open, the entire Russian population could also be affected by the banks’ exclusion in a next stage.
Closed sanctions policy of EU and USA
The current Ukraine war makes it clear that modern wars no longer need to be fought on the battlefield. Economic sanctions, such as Russia is currently experiencing at first hand, now have such great power that their impact should by no means be underestimated. This is already having an impact on the Russian economy. The sanctions, in which the USA and the EU are pulling in the same direction, have led to a massive slide in the value of the ruble, the Russian currency. In this context, actions such as those now being taken by Visa and Mastercard play a rather subordinate role. Far more significant is the exclusion of Swift. This global payment system is used by states to pay for imported raw materials, for example.
The exclusion not only means that Russian assets, which were generated by exporting gas and oil, for example, are now on hold abroad. On top of that, the exclusion means that Russian persons on the sanctions list can no longer withdraw money abroad. Whether the Russian government will be able to withstand this immense pressure for much longer is more than questionable. Ultimately, resentment will spread among the population over time. This is not only due to rising food prices, which will affect the normal population in particular. The first oligarchs with billions in assets are also anything but pleased. It is possible that these influential people will be able to change Vladimir Putin’s mind.