After Visa and Mastercard ended operations in the country due to its war with Ukraine, the Chinese payment system UnionPay was marketed as an alternative in Russia. However, Russians have had problems utilizing this system.
Due to the new sanctions imposed by the US and UK, UnionPay has erased all mention of its Russian-language website dealing with card issuance in Russian banks.
Russian news reported that UnionPay cards associated with the Huawei Pay system had ceased functioning in Russia. Customers complained they were unable to complete payments. All UnionPay card transactions in Russia are processed by Russia’s National Payment Card System (NSPK), which may be hit hard by U.S. sanctions.
Despite the Russian invasion of Ukraine, China and Russia have remained close. In February 2022, just days before the war broke out, the two countries announced limitless cooperation. The Chinese government has remained silent on the invasion of Ukraine.
With over 13,000 limitations imposed on the country and its status as the most sanctioned nation in the world, Russia’s economy received a blow in February 2022, shortly after the invasion started. Russian banks were barred from using the SWIFT (Society for Worldwide Interbank Financial Telecommunication) system, and their foreign currency holdings were frozen.
After American Express, Visa, and Mastercard all pulled out of Russia, UnionPay was hailed as China’s rescue mission. It became one of the few options for Russians to send money outside. According to a news outlet, physical UnionPay cards are accepted for payment in Russia, but similar cards associated with the Huawei Pay platform are not.
This comes only days after reports surfaced that three of China’s biggest banks had ceased taking deposits from Russian financial organizations that had been sanctioned.
Reports cited risks of secondary sanctions as the reason why three central Chinese banks made the choice. Operations with non-sanctioned institutions are continuing.
The US threatened last December to cut off foreign banks’ access to the American financial system if they did business with companies that supply Russia’s weapons sector. China has remained silent despite Western condemnation of Russia’s actions, enabling Chinese corporations like UnionPay to continue doing business with their Russian counterparts.
