Cards are beaten: Visa and Mastercard will soon stop working in Russia

In Russia, the servicing of bank cards of international payment systems Visa and Mastercard will soon cease. All those wishing to will be able to switch to cards of the domestic payment system "Mir". The terms of cessation of servicing of cards of international payment systems have not yet been determined. The Central Bank is working on them. This was reported by the press service of the regulator. Why the Central Bank of the Russian Federation decided to start exchanging cards of international payment systems for domestic ones right now and how this will affect Russians, "MK" found out from experts.

The transition from Visa and Mastercard payment cards to Mir will occur gradually, as clients wish. The Central Bank of the Russian Federation is currently working out the timeframes, emphasizing that they will be reasonable and sufficient for banks to systematically replace all foreign plastic cards of their clients with domestic ones. “At the same time, people do not need to take any action on their own,” the Bank of Russia emphasized. “There is no need to urgently replace cards. Banks will inform clients in a timely manner. Until then, all cards will continue to operate as usual.”

Let us recall that in early March 2022, in the wake of large-scale Western sanctions after the start of the Second World War, international payment systems Visa and Mastercard announced their departure from the Russian market. If there had been no alternative and the well-thought-out payment policy of the Central Bank, which it had been pursuing since 2014, this could have been a serious blow to the domestic payment sector. The fact is that, taken together, these giants accounted for the vast majority of bank cards used by Russians. Thus, at the end of 2021, Visa controlled 39% of the plastic card market in terms of transaction volume, and MasterCard - 24%. However, for citizens, the departure of these international payment systems from Russia turned out to be virtually painless, since their cards issued by domestic banks continued to operate as usual. By that time, NSPK, the operator of the Mir payment system, had been performing their servicing functions for many years. At the same time, NSPK recommended that banks continue to use expired cards, which was implemented.

The Bank of Russia emphasized that the decision to extend the validity of Visa and Mastercard cards, which left the Russian market more than three years ago, was a forced measure. "It was taken so that people could continue to use these cards and not change their habits," the Central Bank of the Russian Federation noted. Today, this measure has lost its relevance. The share of such cards in circulation is naturally decreasing. People themselves prefer to replace them with Mir cards, the regulator emphasized.

According to Elman Mekhtiev, CEO of the Association for the Development of Financial Literacy, in a situation where international payment systems refused to work in Russia, there was no other solution than to extend the validity period of the "plastic". However, the validity period of the card is not only the lifespan of the plastic carrier, but also a way to reduce the risks of fraud. The longer the "plastic" with a unique combination of "card number - card expiration date - secret card code" exists, the greater the chances that the payment instrument will be compromised. Especially in conditions where online payments are developing and more and more trade organizations are becoming targets of cyber attacks. This is why the Central Bank of the Russian Federation has now reminded the market that enough time has passed since the departure of international payment systems and it is simply necessary to reduce the risks.

But in addition to security requirements, there are other important factors that encourage the regulator to take this step. “The main reason is the desire to ensure the country's financial independence from foreign payment systems,” says Sofia Glavina, associate professor at the RUDN University Faculty of Economics. “This reduces the risks of sanctions and restrictions that could affect the Russian economy. The situation is aggravated by the geopolitical threat and the risk of new sanctions.” In general, since 2022, such cards have become perpetual, but now the situation has changed. Most Russians have switched to Mir, and the old cards have simply worn out. And, of course, we should not forget about the upcoming transition to the digital ruble: an external incentive is needed to successfully launch this process, and the rejection of payment cards could be one of them, Glavina emphasized.

"The decision of the Central Bank of the Russian Federation to abandon Visa and Mastercard is not a spontaneous reform, but a logical end to the de-dollarization process that has been going on since 2022," says Alexey Mokrov, head of the investment company Cryptobotpro LLC. After the sanctions, disconnections from SWIFT of Russian banks and the departure of international payment systems, their preservation in circulation was more an illusion than a reality. Now the regulator is simply "taking off the mask": the infrastructure has long switched to Mir, and a new wave of geopolitical aggravations requires complete autonomy of the payment circuit." The transition to the domestic payment system will be gradual, but there is no need to delay. It is already worth ordering a Mir card from your bank, especially for those who receive pensions, benefits or salaries. Refusal from Visa and Mastercard is no longer a matter of comfort, but a matter of sovereignty. And it is better to be prepared for it in advance, both in rubles and in digital alternatives, the expert emphasized.

After the reissue of the payment instrument, nothing will change for citizens and they will be able to use the Mir card as usual. But in connection with the plans of the Bank of Russia, the question arises about what should compatriots traveling abroad do? “For payments abroad, I recommend getting cards of friendly payment systems, for example, the Chinese Union Pay,” advises Maxim Markov, associate professor of the Department of World Financial Markets and Fintech at the Plekhanov Russian University of Economics. “In some cases, you can use cryptocurrency, but, firstly, it is not always suitable, and, secondly, its use requires special knowledge and skills.” Cash can be used for payments on tourist trips abroad, the expert added.

According to Mokrov, citizens can use three options to pay for foreign services from Russia:

1. Get a foreign bank card - if you have a second citizenship, a residence permit or partners abroad. This is a working, but complicated story.

2. P2P platforms (from English "peer-to-peer" - "equal to equal", that is, platforms where buyers and sellers directly exchange assets without intermediaries - "MK") and crypto wallets are increasingly becoming a "backup system". This is a real way to transfer, pay and store funds. However, this method will also require effort to figure out how to use it correctly.

3. Opening cards in South Asian banks in Türkiye, Kazakhstan or the UAE. They actively issue cards to non-residents. There are commissions, but it works, Mokrov assures.