https://ift.tt/mqWP09J UnionPay, Russia’s Possible Payments ‘Savior’ – Cryptovibes.com – Daily Cryptocurrency and FX News

After MasterCard Inc (MA.N) and Visa Inc (V.N) joined other Western firms in halting operations in Russia, several Russian banks intend to issue payment cards that use the network of home-grown payment system Mir as well as China’s UnionPay.

Since Russian banks were excluded from the global financial system, Mir and UnionPay are among the few options left for Russians to make payments abroad following Russia’s invasion of Ukraine. Russia refers to its actions in Ukraine as a “special operation”.

Ally China has refrained from direct criticism despite many Western nations having condemned Russia’s conduct, effectively allowing Chinese companies such as UnionPay to continue business as usual with Russian partners.

The majority of Russian banks already issue cards with UnionPay. However, for fear that could lead to itself being sanctioned, the Chinese payment service is cautious of cooperating with sanctioned Russian banks, the RBC business daily reported on April 20, citing five unidentified people at top Russian banks.

UnionPay failed to respond to a request for comment.

To allow settlements across different platforms and domestic inter-bank transactions, China authorized the central bank’s creation of UnionPay as a coalition of banking operators in 2002. UnionPay – funded by China’s largest commercial lenders and the government – settles and clears payments directly with licensed lenders and banks by issuing prepaid, debit, and credit cards.

It has 87 shareholders including commercial lenders such as China Construction Bank Corp (601939.SS) and Industrial and Commercial Bank of China Ltd (601398.SS), rural credit providers, and affiliates of the People’s Bank of China.

Before China allowed foreign payment networks to set up onshore operations in 2021, it enjoyed a monopoly and in recent years has rapidly expanded overseas. Data from researcher Nilson showed that as of the end of 2021, UnionPay ranked first by the number of cards in circulation worldwide with 9.4 billion.

UnionPay was prompted to build offshore ties with banks and merchants, first in Hong Kong in 2004 and United States in 2005, by the increased Chinese tourism. UnionPay International, an overseas arm founded by UnionPay in 2012, has formed partnerships with over 2,500 institutions globally and is accepted in 180 territories, according to UnionPay’s website.

It said UnionPay cards are issued in more than 70 regions and countries.

Several European financial firms have been involved in its expansion including Travelex, HSBC Holdings PLC (HSBA.L), Moneycorp, and Barclays PLC (BARC.L). In Britain, UnionPay cardholders can withdraw sterling from Travelex and Barclay’s cash machines. Also in Britain, UnionPay cards holders with cards issued by HSBC can make withdrawals from that bank’s cash machines.

Benefiting most from the rising purchasing power of Chinese buyers overseas and domestically, UnionPay is quickly catching up with global competitors in absolute volume processed.  Nilson data showed nearly 40% of global card purchase transaction volume was via Visa in 2021. UnionPay is, however, a close second at 32%, followed by MasterCard at 24%.

As of March 2021, more than 55 million merchants globally accepted UnionPay cards. In Russia, where over 1.6 million point-of-sale terminals support UnionPay QuickPass payment technology, the acceptance coverage is 95%, UnionPay statements showed. The UnionPay cards issued in Russia add up to more than 4 million.

After Western nations imposed many types of sanctions, Russian banks have been prompted to turn to UnionPay due to its high penetration rate.

Interestingly, UnionPay was publicly asked by the National Bank of Ukraine (NBU), a UnionPay partner, to stop processing transactions in Russia and those involving cards issued by Russian banks and used abroad.

In a March 17 statement, NBU Governor Kyrylo Shevchenko said:

“We kindly ask you to make a contribution to restoring peace in Ukraine and cease your operation in the Russian Federation.”