Visa and MasterCard voice concerns over Russian proposed legislation

Visa and MasterCard have warned about the impact of proposed legislation in Russia that will increase the control of Russian authorities over its payment systems.

The proposed legislation comes after further US sanctions were imposed in April 2014 following continued tensions between the US and Russia over Ukraine.

The Duma, the lower house of the Federal Assembly of Russia, is working on draft legislation which is expected to require a payments service provider operating in Russia to place its processing centre in the country.

This could offer Moscow the chance to expropriate overseas service providers in the case of future sanctions, sources close to the discussions report.

Martina Hund-Majean, CFO at MasterCard, commented: "I can see it will make it a more complicated situation for anybody that has a payment network in Russia."

In addition to the Duma’s proposals, Russia’s central bank plans to set up a company to operate a national payments system.

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The proposal to establish a national payments system was ordered by Valdimir Putin following Visa’s and MasterCard’s suspension of services to customers of SMP Bank in March 2014.

The suspension was in response to US sanctions against two Russian businessmen, Arkady and Boris Rotenberg, brothers who jointly control SMP Bank.

The government has said that Moscow does not intend to lock the two American payments service providers out of the market.

Putin instead suggested that by keeping their processing centres outside of Russia and suspending services to Russian consumers they had "undermined their credibility" and would lose market share as a result.

Russian President backs plans to build own payment system