UnionPay has become completely useless for Russians

Why is the Chinese payment system curtailing its operations in our country

The Chinese UnionPay system has actually brought to naught, made its presence in the Russian financial market meaningless. In addition to earlier problems, it introduced a ban on servicing its cards issued by foreign banks in the terminals of sanctioned Russian acquiring banks. In principle, everything has been moving towards this for a long time: the seemingly “friendly” UnionPay, with which so many hopes were associated after the withdrawal of the “unfriendly” payment systems Visa and MasterCard from the country in March, and did not try to become their full-fledged replacement.

Nominally, UnionPay remains the only international payment system that continues to operate in Russia. In fact, its existence can be forgotten. Back in the spring, it became known that the system banned the largest acquiring banks in the Russian Federation from issuing their cards, which fell under the toughest blocking US sanctions. But these are actually all the largest banks in Russia! Reports that such UnionPay cards do not work abroad (in particular, it is not possible to withdraw cash), and online stores do not serve them, began to arrive in May.

Acquiring, we recall, is a banking service for making payments from plastic cards. The bank takes a commission for this – a certain percentage of the transaction. There is one more participant in the operations – the issuing bank that issued and maintains the buyer’s card. At the moment of making the payment, the acquirer (service provider) and the issuer exchange information, after which the buyer sees the inscription “Approved” on the POS-terminal screen (Point Of Sale – point of sale).

“You have to understand that the share of UnionPay in the domestic market of payment cards is extremely small – no more than 2%,” says Pavel Utkin, Leading Lawyer of the Parthenon United Legal Center. – Moreover, a very decent share of “plastic” came into circulation this spring, when people still hoped to pay for foreign purchases and services in this way. But when information appeared that the system, under fear of secondary sanctions, would not work with Russian sanctioned banks, the issuance abruptly stopped.”

Accordingly, the interlocutor of “MK” notes, the hopes for UnionPay did not materialize from the word “absolutely”. Moreover, they did not materialize precisely because of the Chinese side: in Russia, users were ready to pay as much as 15 thousand for issuing a card and paid in the spring. It’s just that UnionPay was considered as a relevant alternative to Visa and Mastercard, but in the end it turned out to be zilch.

“On the one hand, the management of UnionPay is afraid of secondary sanctions,” says Utkin. – The second circumstance is related to multicurrency: conversion does not always take place directly in the currencies of the countries where the transactions come from. If, for example, the conversion of rubles is carried out through dollars or euros, this can instantly cause the system to plug due to sanctions against the Russian Federation.

The same story with cross-border transfers. In addition, UnionPay is politicized: even in those countries where it fully operates, there are certain restrictions from the Chinese authorities. However, this will not affect trade between Moscow and Beijing in any way: it is already too small a problem.”

Yes, today China is the largest trade and economic partner of Russia, but, apparently, it does not want to expose its national payment system to a blow under the conditions of the sanctions war between Moscow and the West.

At the end of April, UnionPay froze negotiations on the issuance of cards without explaining the reasons, Vladislav Antonov, a financial analyst at BitRiver, recalls. And now Russians will not be able to pay for purchases with UnionPay “plastic” at POS-terminals of sanctioned Russian banks. Cards can only be used abroad or at terminals of credit institutions that are not under sanctions. Foreign online stores also block such payments. In this regard, the volume of transactions with UnionPay cards is low.

As for foreign, primarily Chinese tourists in Russia, this situation also infringes them to some extent. But, apparently, it is insignificant, since the citizens of the PRC, when making payments, mainly (more than 90%) use AliPay and WePay cardless services.

“According to the most conservative estimates, 95% of Russians do not transfer money abroad and do not pay for purchases in Western online stores, they absolutely do not need it,” says financial analyst Mikhail Belyaev, Candidate of Economic Sciences. – It is clear that the rest of the part should not suffer. And I would advise not to neglect the domestic map “Mir”. With us, it is possible to carry out all operations without any problems – settlements, payments, transfers, and cash withdrawals. But it also works well in countries like Turkey, which are the most popular among Russian tourists.”