Russian banks, after sanctions, consider using Chinese system

Several Russian banks on Monday considered the possibility of issuing credit cards based on a Chinese payment system, after major financial and accounting companies announced that they would suspend their services in Russia due to the invasion of Ukraine.

Ernst & Young and Deloitte cut ties with their Russian operations on Monday, both saying they would work to support thousands of colleagues who will be affected. Ernst & Young cited what it called the “shocking and abhorrent war in Ukraine,” and Deloitte also said it would leave Moscow’s ally Belarus.

KPMG and PricewaterhouseCoopers — the other two accounting firms that make up the group known as the Big Four — announced their departure from Russia a day earlier.

Other big companies are pulling out of Russia, including Apple, Shell and Ikea. Visa, Mastercard and American Express withdrew their services over the weekend.

This is forcing Russian banks to look for ways to carry out their transactions.

Banks Sberbank and Tinkoff announced on Sunday that they were evaluating the possibility of using the Chinese UnionPay system. Sberbank, Russia’s largest bank, said it would shortly announce a date for the switch.

Sberbank and Tinkoff warned their users that they will still be able to use their Visa and Mastercard for transactions within Russia, but from Wednesday they will not be able to use them for payments abroad.

Russia’s Central Bank warned on Sunday that all cards attached to the Visa or Mastercard systems would stop working for purchases on foreign websites or for transactions outside the country.

The Chinese UnionPay system benefits from its monopoly status in China, the country’s huge population and being based in the world’s second largest economy, making it a serious rival to Visa and Mastercard.

UnionPay cards are accepted at physical stores in 180 countries and regions and at online stores in 200 countries and regions, according to its website.

China has reaffirmed its ties with Russia and the Chinese foreign minister declared on Monday that Moscow is “the most important strategic ally” of Beijing.

China has refused to criticize the invasion of Ukraine, but has called for dialogue and respect for the countries’ national sovereignty.