Visa and Mastercard suspend Russian operations, or did they???

[yaesu]

US-based credit card giants Visa and Mastercard have both just announced they will sanction Russia by suspending their Russian business operations.

Visa Inc, based in California, issued a statement that said: “Visa will work with its clients and partners within Russia to cease all Visa transactions over the coming days. Once complete, all transactions initiated with Visa cards issued in Russia will no longer work outside the country and any Visa cards issued by financial institutions outside of Russia will no longer work within the Russian Federation.”

Mastercard: “We have decided to suspend our network services in Russia. This decision flows from our recent action to block multiple financial institutions from the Mastercard payment network, as required by regulators globally. With this action, cards issued by Russian banks will no longer be supported by the Mastercard network. And, any Mastercard issued outside of the country will not work at Russian merchants or ATMs [cash point machines].”


So, sounds like Visa cards issued in Russia can still be used in Russia. A little smoke & mirrors maybe?

Also: Reuters news agency noted that the Tass Russian news agency had reported that Sberbank Rossii PAO, Russia’s largest lender, said sanctions announced by Visa Inc and Mastercard Inc would not affect users of the cards it issues in Russia when used inside Russia.

[Igel]

1. Think of Visa and Mastercard as franchises.

Individual banks use the card name, but link to a larger network.

My Mastercard was with a specific bank (call it B1). Last month it moved from bank B1 to bank J. Same number. Same services. But strictly speaking, when I buy a burger and use my Mastercard my burger joint sends the info to its bank, which sends it to my bank. My bank sends them the money.

Now, if my burger place had the same bank I use (B1) then it could clear almost immediately, instead of "processing" showing up for a few days.

If MC or V wanted to cancel all uses of their cards in Russia, they'd have to find a way to keep (e.g.) Sberbank from using the card numbers and Russia-internal settlement system. Good luck with that. I don't know how they could enforce this (apart from a law suit to enforce a contract, assuming that the contract's amenable to that kind of a thing). And given how Putin's pressuring Western-subsidiaries and orgs with Western connections, I suspect that the lawsuit would fail and if Sberbank complied (like that would ever happen) they'd be sued.

If connections between the two countries are scrapped, then the settlement system can't be international.

[yaesu]

3. Interesting analogy. & talking about franchises I can imagine how complicated that would make

fast food restaurants like KFC & Mc D to shut things down. If they refuse to support the local owned franchises doesn't that end contractual obligations, open up all kinds of legal & business disputes. What a nightmare.

[Buckeyeblue]

4. It's pretty easy really

The first 6 numbers if the credit card identity the issuing financial institution. Additionally, all transactions include a currency code. So Visa and MC could shut off cards with a BIN (1st 6 numbers) tied to a Russian bank. And they could shut off transactions originating in Russia as well--although they may want to give non-Russians a chance to be able to pay for things while they are trying to leave the country.

They will need to implement some code to do this, so it will need to be tested and go through a change control process before it is implemented.

[SergeStorms]

2. Imagine how much they'd make....

on credit card conversion rates right now? What's the ruble worth right now, about a penny?