The right time for the Rupay And UPI to make a grand entry into Russia. US firms Visa Inc and Mastercard suspend services in Russia

US firm suspends Russia services
Since Russia launched a special military operation in Ukraine, US financial services companies have suspended international services in Russia.

US payments firms Visa Inc. and Mastercard Inc. have suspended operations of their services in Russia and will act to stop all transactions there. According to all these companies, cards issued in Russia cannot be transacted internationally. Simultaneously, cards issued outside Russia will also not work in Russia.

Al Kelly, an official at the US firm Visa, said in a statement: "Russia’s unprovoked invasion of Ukraine and unacceptable incidents have forced us to act."

Former statement of the chairman of the Central Bank of Ukraine

The suspension of Visa and MasterCard services in Russia was reported by Ukraine’s central bank chief Kyrlo Shevchenko to Nikkei Asia’s central bank. As a result, Zelensky urged all these companies to halt their credit and debit card transactions issued to increase pressure on Russia. PayPal Holdings Inc. (PYPL.O) also earlier announced its decision to suspend its services in Russia.

Biden and Volodymyr Zelensky
US President Joe Biden and Ukrainian President Volodymyr Zelensky welcomed Visa and MasterCard’s decision to suspend their operations in Russia over a phone call, the White House said on Visa and MasterCard’s work bio. "US President Biden says his administration will provide security equipment, humanitarian and economic aid to Ukraine"

The decisions of these payment firms are going to increase the problems of Russian citizens. Because they are already battling with rising inflation, economic hardship and import of imported goods. This decision has left his future uncertain.

The United States and the West have imposed unprecedented economic sanctions on Russia, which has frozen most of Russia’s central bank’s assets worth $640 billion. The world’s biggest economic sanctions were imposed on Russia. Which the world knows as SWIFT system, in fact, it is a global payment system. With the help of which payments can be made from anywhere in the world.

War of international companies against Russia

Russia never thought that any international company would boycott them. But the boycott of these global companies is going to be very heavy on the Russian public. Because Apple iPhone iPad maker MSC and Maersk, the world’s largest shipping line company, suspended container shipping from Russia. Apart from this, Boeing and Airbus, the world’s largest airplane maker, stopped the supply of parts to Russian airlines. Apart from these, Facebook, Instagram, Twitter and other news agencies are boycotting Russia. Due to which the common Russian people are afraid of being cut off from the world. Because they have never lived life like the people of North Korea and Iran.

Huge rush of banks and ATMs in Russia

Just as America and Western countries have imposed harsh economic sanctions on Russia. This created fear among the general public of Russia. Because they were afraid of losing their hard earned money. The way Russia was taken out of the SWIFT system and frozen most of its foreign exchange reserves of $640 billion. This is affecting the Russian currency ruble, the Russian currency has reached 135 rubles per 1 dollar.

Long queues of people outside banks and ATMs in Russia. Because people are afraid that some bank may drown. In view of this, the Central Bank of Russia has increased its interest rates from 9% to 20% directly. Russia’s banks and ATMS are no longer able to transact in dollars and euros due to the exclusion of the SWIFT system. This is the reason why Russian banks are not giving Euro and Dollar currency. The government of Russia has banned the taking of foreign currency out of the country.

For days, ATMS around Russia had long lines as people rushed to withdraw cash – both foreign currency and ruble – amid fears that electronic banking could malfunction. The Russian Central Bank more than doubled its prime interest rate to 20%. Moscow’s banks and ATMS were no longer giving euros and dollars. They remain in short supply. The Kremlin, in turn, has banned all Russians from transferring foreign currency abroad.

Massive shortage of electronic goods in Russia

The problems of the common people of Russia are not only ending financially. Rather, the Russian people are going to be short of specialized electronics and equipment. However, it is also true that Russia has benefited from previous sanctions and promoted one of its domestic production. But Russia is dependent on imports of technology, medicine and other important goods. There is uncertainty about their prices in the future. That’s why Russian citizens are busy storing them.

MasterCard and Visa

Two important US companies, Mastercard and Visa, had substantial business. Mastercard derived approximately 4% of its net revenue from business carried out within and outside Russia. Which is a huge figure.

Similarly Visa’s total net revenue from Russia in 2021 was about 4% of its total revenue.

MasterCard and Visa continue to be used domestically

Russia’s largest lender Sberbank Rossii PAO (SBER.MM) said, "Both of these cards will not affect users of cards issued in Russia. Because these cards can be used to withdraw money domestically, transfer money, offline stores and the Russian Internet." Will be able to pay in the store. Transactions in Russia pass through the domestic national payment card system, which does not depend on foreign payment systems.

The nature of Russia after the Crimean conquest

Russia won Crimea in 2014, which in return imposed harsh economic sanctions on Russia. Meanwhile, Russia itself has been taking steps to increase the independence of its financial system over the years. Russia tried to strengthen its own banking messaging system. Which we know as SPFS. Russia pitted its card payment system MIR against SWIFT in the US and Western countries in 2015. So that Russia can face economic sanctions.

An Opportunity for India’s Rupee and UPI

India’s Rupee and UPI systems cover 60% of India’s transactions. With this, money can be easily sent from one place to another. Russia’s boycott by MasterCard and Visa could prove to be a significant opportunity for India’s rupee and UPI.

However, it is also true that India should not offer Rupee and Unified Payments Interface to Russia at this time. Because this can anger the US and Western countries.