More Russian Banks To Begin Issuing Chinese Union Pay Cards From Q3 2022
China’s UnionPay will begin accepting applications from a new swathe of Russian banks for Union Pay debit cards sometime in Q3 this year. UnionPay have been active in Russia for several years and its logo and ATM terminals are familiar to most Russians, however the exit of US and EU card issuers from the Russia market, together with sanctions has necessitated a considered approach by the Chinese issuer over providing significantly increased services in the country.
Absolut Bank expects to start issuing in the third quarter of 2022, while Rosbank, Ak Bars Bank and Home Credit are all preparing to release plastic Union Pay cards. UnionPay has delayed expansion decisions over the service in Russia because of the risk of secondary sanctions. This could also, in some circumstances, delay the approval of applications. However, holders of such cards will be able to use them to withdraw cash, pay for goods and services both in Russia and abroad.
The next stage will be the issuance of co-badged cards with the existing Russia MIR payment system.
Union pay will also be made available at ten Russian credit institutions, including RSHB, GPB, Zenit, Post Bank, Solidarity, Bank St. Petersburg, RRDB, Primsotsbank, and CB Primorye.
In March 2022, the share of active UnionPay cards in Gazprombank’s existing portfolio increased by more than ten times, with expectations of further rapid growth. Gazaprombank have been offering Union Pay services for a number of years, the increase was due to Western issuers pulling out.
MTS Bank began issuing plastic cards of the Chinese payment system at the end of March 2022, at the beginning of April the bank opened pre-orders for cards on the website and has received more than 56,000 applications.
However, Union Pay need to be careful. The system uses US dollars in its operations, and cooperation with Russian banks may threaten it with at least large fines or other consequences.
Some Western retailers are already refusing to accept cards issued by Russian banks. This is a violation of the rules of the international payment system, but it the West has ignored these protocols. This means that for some Russian nationals, an alternative option is either to apply for a UnionPay card or open a bank account in other countries such as Kazakhstan, Armenia, Kyrgyzstan, Uzbekistan, where Visa or Mastercard can still be issued to Russian nationals.
Russia Briefing is written by Dezan Shira & Associates. The firm has 28 offices throughout Eurasia, including China, Russia, India, and the ASEAN nations, assisting foreign investors into the Eurasian region. Please contact Maria Kotova at email@example.com for Russian investment advisory or assistance with market intelligence, legal, tax and compliance issues throughout Asia.