Visa and Mastercard will stop handing transactions involving the Russian banks SMP and InvestCapitalbank, both of which were hit with additional sanctions announced by the White House on Monday. The credit card companies have already stopped working with Bank Rossiya and Sobinbank thanks to an earlier round of sanctions.
Visa issued a statement on Tuesday attempting to reassure its clients, saying: "We regret any disruptions that the institutions, their cardholders or merchants may experience. All of Visa's systems are processing normally, and we continue to service our other unaffected Russian clients."
Mastercard also issued a statement, saying that they will remain “open for business as usual with all our Russian banks, with the exception of Rossiya, Sobinbank, SMP Bank and InvestCapitalBank. Service of cards issued by the latter two banks will be stopped shortly according to the revised U.S. sanctions announced today."
The company added that cardholders will still be able to use it for cash withdrawals from ATMs or bank offices.
According to the Wall Street Journal, these four banks make up a relatively small portion of Visa and Mastercard's clients in the country, but the new restrictions are still taking a toll on the U.S. firms:
The subject of Russia came up several times in a conference call Visa executives held with analysts last week to discuss its quarterly results. In addition to the sanctions, Russia is considering plans to set up its own payment system, which could remove the need to use Visa and MasterCard domestically.
The idea for a Russian payment system was first floated by the Kremlin in March, as a way to shift away from reliance on Western credit card companies and to soften the blow of sanctions. Russian President Vladimir Putin said soon after Mastercard and Visa announced that they would cut ties with Bank Rossiya and Sobinbank that ""It is really too bad that certain companies have decided on ... restrictions. I think this will simply cause them to lose certain segments of the market - a very profitable market." The credit card companies did, indeed, suffer losses following the announcement.
SMP and InvestCapitalbank were on the list of 17 companies, many of them in the the gas or financial service sectors, named in the latest round of U.S. sanctions against Russia. Seven individuals, described as Putin's "cronies," also made the list. The EU also hit Russia with additional sanctions, adding 15 names to the list of those facing financial restrictions. Russia was not pleased with the new developments.
This article is from the archive of our partner The Wire.