Understand the impact of the Ukraine conflict from a cross-sector perspective with the Global Data Executive Briefing: Ukraine Conflict
Chinese payment services provider UnionPay is reluctant to work with Russian banks over the fear of secondary sanctions, Russian news outlet RBC reported.
UnionPay abandoned its plans to issue cards in partnership with Sberbank and suspended talks with other lenders, several sources told the publication.
“The project is temporarily on pause, they do not officially confirm the connection with the sanctions, they say that it is on pause until further notice,” one of the sources was quoted as saying.
After the Russian invasion of Ukraine, payment majors such as Mastercard, Visa and American Express suspended their operations in Russia.
The sanctions forced Russian banks to turn to China’s UnionPay for card issuance.
Apart from Sberbank, VTB Bank, Alfa-Bank, Otkritie Bank, and Promsvyazbank were among those looking to work with UnionPay.
These major Russian banks including Sberbank are subject to severe sanctions from the US-led Western alliance.
The restrictions render the cards issued by sanctioned banks outside Russia useless as banks of nations that have imposed sanctions do not service Russian banks’ cards irrespective of the payment system.
Notably, UnionPay continues to operate with banks that are not subject to sanctions, one of the sources added.
Earlier, the Central Bank of Russia had said that Russian-issued Mastercard and Visa cards can be used within the country until their expiry.
Meanwhile, the central banking authority has registered a new payment system called HELLO to dampen the impact of sanctions imposed on Russia.