Cryptocurrency exchanges and financial services companies will soon likely no longer be able to accept transactions completed with many major credit cards after the companies shut down their operations for Russia-based users.
On Saturday, Visa, Mastercard and PayPal announced they would suspend operations in Russia following the country’s military actions in Ukraine. Visa called Russia’s actions are an “unprovoked invasion” while Mastercard said his decision was aimed at supporting the Ukrainian people. The next day, American Express made a similar announcement, proverb it would halt operations in both Russia and neighboring Belarus.
Apple Pay and Google Pay are said to have limited services for some Russians, although users are also likely not to be able to use the aforementioned credit cards for transactions in the payment apps.
We are thankful for @Dan_Schulman in front of #StandingwithUkraine and for suspending business in Russia. It makes a huge difference. @PayPal we welcome you to Ukraine! Your presence will provide greater financial freedom to 40 million Ukrainians in these difficult times.
— Mykhailo Fedorov (@FedorovMykhailo) March 8, 2022
The decision by three major US credit card companies and others to shut down operations in Russia appeared to be unrelated to attempts to comply with economic sanctions imposed on certain Russian banks and high net worth individuals. Coinbase announced on Sunday that it had blocked more than 25,000 wallet addresses “related to Russian individuals or entities we believe are engaged in illegal activity,” but as of publication, the credit card ban has not publicly addressed.
After the change in the companies’ policies, the average Russians who use Visa or American Express credit cards abroad or within the country would seemingly no longer be able to use them for day-to-day transactions. Mastercard cards issued by Russian banks are no longer supported by the company’s network, while those issued by other foreign banks “do not work at Russian merchants or ATMs”.
“We are not taking this decision lightly,” said Mastercard, which has been operating in Russia for more than 25 years.
However, the Russian central bank issued a statement on Sunday saying that both Mastercard and Visa cards would “continue to work as usual in Russia until their expiration date,” allowing users to use ATMs and make payments. It is unclear how the Central Bank of Russia came to this conclusion, given the statements from the credit card companies, but it acknowledged that cross-border payments and personal use of the cards abroad would not be possible.
While the companies have not provided an exact timeline as to when operations would completely cease, at least one cryptocurrency exchange warned users of the change, which is likely to affect many Russian users. On Tuesday, Binance announced as of Wednesday, the exchange would no longer be able to accept payments from Mastercard and Visa cards issued in Russia – the company does not accept American Express.
This is not in our hands. Not our decision. https://t.co/K3mH75Ul3B
— CZ Binance (@cz_binance) March 8, 2022
Presumably, all consumers looking to buy crypto through a credit card exchange issued in Russia by one of these companies won’t be able to do so anytime soon, although peer-to-peer transactions are seemingly still available. There was mixed reaction from social media to the decision, with many claiming that the credit card companies could help Ukraine by hurting Russia economically, but at the expense of civilians who had nothing to say about their country’s military actions.
“It is a crime to prevent Russian citizens trying to flee Russia from accessing their money,” said Marty Bent, co-founder of crypto mining company Great American Mining. “Visa and Mastercard [are digging] their own grave by politicizing their products and pushing people all over the world to Bitcoin.”
“For someone who stays in Russia, the cards continue to work, but you can’t leave because you can’t pay anything,” said Twitter user Inna, who claimed to live in Moscow. “Putin approves.”
As I warned two weeks ago. #crypto is only the way. #Visa Ana #MasterCard just showed the world how unstable, unrelated, centralized and political they are by abandoning Russian people who are as far from the war and Russia as possible. This is modern fascism. https://t.co/wnHEtoKO0J
— Anti Danilevski (@AntiDanilevski) March 6, 2022
Related: Crypto Offers Russia No Way Out of Western Sanctions
While the cutting off of Visa and Mastercard is a seemingly significant blow to Russia and its residents, suggest the country can turn to Chinese payment systems like UnionPay – accepted by peer-to-peer cryptocurrency exchange Paxful. The Bank of Russia also has its own Mir cards for payments domestically and in nine countries, including Belarus and Vietnam.
Regulators have not issued guidelines for crypto exchanges that aim to dissuade Russian users from trading their coins. Both the United States and the European Union have hinted that they would be looking at Russia possibly using digital currency transactions to evade sanctions. Leaders at many exchanges, including Kraken, have issued statements stating that they will adhere to government guidelines but will not unilaterally block all Russian users.