As Mastercard Inc (NYSE:MA) and Visa Inc (NYSE:V) leave Russia amid Western economic sanctions, Moscow has put its own card payments system into operation. The move is touted as a victory in the country’s financial war with the West.
Known to Russians as Nspk, Fortune reports, the Kremlin had been studying a payment tool to enable credit cards for years, even without Western financial technology. In June 2014, after the invasion of Crimea, Russia created the system to process domestic credit card transactions.
Although some service cuts have occurred —which have generated hiccups for businesses dealing with the financial system— Nspk supports card transactions in Russia, including those bearing the Visa and Mastercard logos.
The payments system launched a spin-off that works under its umbrella, the Mir card company, which has more than 100 million cards operating in Russia.
According to a The Wall Street Journal editorial, the system showcases Russia's resilience and a rare victory for President Vladimir Putin in his financial war with the West.
A Mastercard spokesperson established that the company cannot block domestic transactions in Russia, and it receives “no benefit” from them.
Looking For Acceptance
Dr. Leo Lipis, the CEO of the payments industry consulting firm Lipis Advisors, said that a switch is “a hub for communication that connects the various banks involved in a payments network.”
Today, many Russians whose cards belonged to the Visa and Mastercard franchises are facing problems abroad, and the issues are spreading to citizens in their daily lives.
Last year alone, there were approximately 197 million cards with these franchises, according to a report by the Nilson Report.
At the moment, the Kremlin is looking for Mir to have more acceptance and is interested in spreading it to allied countries such as India and China. Russian media outlet Tass detailed last week that Venezuela and Iran would be others keen to use it.
However, experts agree that Russians will still feel dependent on U.S. technology to support their card payments platform.