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Visa, MasterCard Mull Russian Market Amid Tougher Regulation

© SputnikVisa, MasterCard Mull Russian Market Amid Tougher Regulation
Visa, MasterCard Mull Russian Market Amid Tougher Regulation - Sputnik International
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International payment operators Visa and MasterCard are considering the possibilities of continuing operating in Russia after recent amendments to a law on a national payment system significantly toughened regulations on their activity in the country, Bloomberg reported citing the companies’ CEOs.

MOSCOW, May 20 (RIA Novosti) – International payment operators Visa and MasterCard are considering the possibilities of continuing operating in Russia after recent amendments to a law on a national payment system significantly toughened regulations on their activity in the country, Bloomberg reported citing the companies’ CEOs.

Russia’s demands “just go beyond what we’d be willing to do,” Visa CEO Charlie Scharf told the agency in an interview Monday at an investor conference in Boston. “I would hope that we get to a different conclusion than to get to July 1 and just say we’re not willing to participate.”

Russian Prime Minister Dmitry Medvedev said Tuesday Visa and MasterCard were discussing amendments to the law on the national payment system with the Russian Central Bank and commercial banks. The US companies believe this creates certain risks for their future operation in Russia, but neither of the sides is dramatizing the situation, Medvedev said.

MasterCard CEO Ajay Banga said company representatives had met with the Central Bank and Ministry of Finance, without giving details whether MasterCard was willing to meet Moscow’s demands.

The law to create a national card payment system, signed by Russian President Vladimir Putin earlier this month, tightens requirements for payment system operators with clearing and settlement centers outside Russia.

Specifically, it obliges foreign payment systems starting July 1 to make quarterly contributions to a special account in the Central Bank in the amount of 25 percent of the average daily turnover. In addition, penalties are introduced for operators of payment systems for unilateral termination of customer service.

The amendments came after Visa and MasterCard denied service to several Russian banks in late March as a result of US sanctions amid the escalating conflict in Ukraine, raising concerns about the security of the country’s financial system.

A recent report by US bank Morgan Stanley said keeping business in Russia will cost Visa and MasterCard much more than exiting the Russian market. Complying with the new law will cost Visa and MasterCard at least $2.9 billion, or some five times more than the companies’ combined annual revenue in Russia.

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