Russian newspaper RBC reported last week that UnionPay, the Chinese state–led financial services network, had suspended negotiations with Russian banks on issuing new bank cards for their customers, now unable to make purchases outside Russia as a result of Visa’s and Mastercard’s withdrawal. Russians could still use the cards to make domestic purchases, owing to Russia’s local Mir payment system.
“The payment processor is reportedly worriedabout being the target of sanctions from the U.S. and other countries if it works with sanctioned Russian banks. These sanctions might include being barred from doing business with an American individual or company, or importing goods to or exporting goods from the U.S. Effectively, the sanctions could sever UnionPay from the global financial system… UnionPay did not immediately respond to a request for comment,” according to a report in leading business magazine Fortune.
UnionPay, launched in 2002, is a state-led financial services network operated by China’s central bank, the People’s Bank of China, and is the world’s second largest card brand with a 32% market share, according to 2020 data from the Nilson Report.
“UnionPay’s hesitance to enter the Russian market is the latest example of large Chinese companies growing wary of doing business in Russia, despite the fact that China has not officially joined Western leaders in piling sanctions on Russia,” according to the Fortune report.
“China’s three major state-owned oil companies have reportedly been warned by Beijing to avoid making new investments in Russia, and last month, state-owned oil producer Sinopec suspended talks on a major joint venture in Russia with Sibur, the country’s largest petrochemical company,” Fortune reported.
“Both the Bank of China and the Industrial and Commercial Bank of China, two of China’s largest lending banks, have also stopped offering clients finance options for purchases of Russian commodities,” Fortune reported quoting Bloomberg.
Huawei has suspended new orders of network equipment for Russian customers, according to Russian media outlet Izvestia.