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The Green Sheet Online Edition

March 14, 2022 • Issue 22:03:01

Reader's Speak: China UnionPay filling void left by Visa, Mastercard

News recently broke that Russia's biggest banks, Sberbank and Alfa Bank, are in the process of switching to China's UnionPay's card system after Visa and Mastercard suspended operations in Russia as part of worldwide efforts to isolate Moscow from Western financial structures due to its invasion of Ukraine. We wish to thank Ola Oyetayo, CEO and co-founder of Verto, www.vertofx.com, a cross-border payments infrastructure built for fast-growing startups and enterprises, for sending us the following commentary in response to this news:

"International sanctions against Russia are effective because they are essentially preventing transactions, domestic and international, from taking place in Russia," Oyetayo wrote. "This is placing immense pressure on the Russian economy, which is why we expect UnionPay to become very popular among the Russian people.   "UnionPay is an established card payments network, despite mainly being used by cardholders in China. It is the largest card payments network in the world in volume and second-largest, behind Visa, in the number of transactions. In terms of capabilities, it's almost identical—UnionPay cards are also contactless, supported by mobile payments like Apple and Samsung Pay. Acceptance is also growing as more partnerships between UnionPay and other payment networks are being signed.   "It's important to note that Chinese-issued cards limit cash withdrawals due to China's capital controls, but this shouldn't matter for cards issued by Russian institutions.   "Another alternative to Visa, Mastercard and SWIFT is, of course, cryptocurrencies, and it's expected that Russians might have already started using crypto to work around the bans. Given the decentralized nature of cryptocurrencies, they would be quite difficult to sanction, but the private companies who are the middlemen (exchanges, for example) can place limits on Russian users."

Sanctions and global business

Sanctions are intended to cause disruption and pain to bring about a desired result—in this case Russia's withdrawal from Ukraine. The pain is felt deeply by ordinary people and businesses. Have the sanctions caused disruption to your business in our interconnected world? If so, how are you handling the issues that arise? Let us know at greeensheet@greensheet.com. end of article

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