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The Ukraine-Russia War: Tragedy and Conflict Heralds a Schism in Global Payments

Commentary by Trevor Culbertson

The ongoing and escalating conflict between Russian and Ukrainian forces has prompted Western governments to enact numerous and widespread sanctions against Russia and its oligarch class. The short-term consequences are constantly in flux while the outlook of the U.S. and worldwide payments industry will no doubt experience profound changes that are already unfolding in the week (of writing) since the Russian invasion of sovereign Ukraine.

Below are select updates and thoughts on what has happened so far.


Visa and Mastercard have officially cut off Russian-based financial institutions from their card networks, following suit with U.S. government sanctions. The ban is already being felt for those living in Russia, with numerous reports of foreign credit and debit cards being declined at ATMs, shops, and banks. In concert with other initiatives, Russia it seems has attempted to embolden their resistance to sanctions far in advance, including pushing their domestic card networks and payment rails to lessen their reliance on Western merchant services. For the moment, however, eCommerce and POS transactions alike will become more difficult if not impossible for Russian consumers and merchants to execute.

February 2022 SEC filings submitted by Mastercard and Visa revealed their annual revenue streams compromise 4% of Russian-related business activities for both card brands and 2% and 1%, respectively, of Ukrainian activity. American Express released a similar statement that stressed they are complying with any applicable sanctions, while stipulating that they have only one Russian-based card issuing partner with a “handful” of others that are merchant-facing. Amex recently scored a contract with Sberbank to expand its card network in 2021.

Russia’s domestic card network, Mir, released less than a year after Russia’s annexation of Crimea, captures only about a quarter of the market. That leaves just under 75% to Visa and Mastercard, a large gap of the three hundred million total credit and debit cards in Russia that could be filled with Mir and others once sanctions begin to be fully felt.

In addition to card brands shutting off access, the Central Bank of Russia has confirmed that Apple Pay and Google Pay are no longer accessible for at least a few Russian banks. Apple has taken it a step further by suspending all sales of its products in Russia, and the country will not receive further imports from Apple for the time being. Wise and Remitly, two major money transfer services have halted availability in Russia. Conversely, Revolut, Western Union, and PayPal and its international service Xoom all seem to be still operating in Russia, although PayPal has blocked select users and banks and will no longer accept new Russian accounts, while Western Union has declared that domestic transfers in Russia will be unavailable beginning April 1st.

In December of last year, Western Union announced an expansive partnership with Ukrainian financial institutions and the Commonwealth of Independent States (Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, and Uzbekistan) to grow international P2P payments. That partnership will likely prove vital for both Ukrainian and Russian people looking to receive remittances during the war.

SWIFT and Banking

One of the first sanctions to be put on the table and now implemented is the removal of a majority of Russian banks from the Belgium-based Society for Worldwide Interbank Financial Telecommunication, or SWIFT, a worldwide interbank system connected to over 11,000 institutions that allows for safe and quick payments across borders. The Russian banks under scope are VTB, VEB, Bank Otkritie, Promsvyazbank, Bank Rossiya, Sovcombank and Novikombank. Any companies or institutions with over 50% ownership by these banks will also be removed from SWIFT. Two big exemptions to the ban are Sberbank, the largest in Russia, and Gasprombank. Both handle the vast majority of commodity transactions in Russia, namely oil and gas.

Russian banks that have been removed will no longer be able to satisfy payments to SWIFT members, although fears that this would prompt Russia to expand its previously domestic alternative, Financial Message Transfer System of the Bank of Russia, or SPFS, appear to have come true. SPFS is already synced with 23 foreign banks, mainly in Belarus, but reports of Russia seeking talks with China over a connected messaging system in some form have emerged. It remains to be seen how effective this transition will be, as SFPS is viewed by many as inferior to SWIFT in speed and reliability, and China’s own network, CPIS, typically handles less than 15,000 transactions a day compared to SWIFT’s 15 million.

A more concrete development has emerged though, with Sberbank now offering money transfers to Chinese Alipay wallets in yuan. This provides Russian civilians with another option to offset the dramatic drop in ruble valuation, which has hovered around 75 rubles to $1.00, and at the time of writing peaked at 116. Even with this dramatic drop, it could have been worse if not for Russia enacting sanction-proofing measures going back a decade, including a reduction in dollar-traded exports from 95% in 2013 to 10% today for big importers like China and Brazil.

Due to both inflation and the immense sanctions aimed at them, the Central Bank of Russia raised key interest rates from 9.5% to 20%. Regardless of specific sanctions, exposure, and further divestment, U.S. banks will ultimately feel some of the hurt currently being felt by Russia’s economy.

Cybersecurity and Crypto

U.S. officials from the Treasury Department and the U.S. Cybersecurity and Infrastructure Security Agency (CISA) met with JPMorgan Chase and Citigroup executives last week to discuss potential cyber threats from Russian and third-party hackers and ransomware organizations. This comes as major Ukrainian banks and government agency websites were effectively inaccessible for a period of time just prior to the invasion.

While U.S. and European governments have implemented quick and harsh responses to the Russian invasion of Ukraine, it is a different story for cryptocurrency exchanges. Both the White House and U.S. Treasury Department, as well as the Ukrainian government, have formally requested crypto exchanges to halt access to Russian assets. Binance, Coinbase, and Kraken have all stated they will filter and block any users who they believe qualify as being under government sanctions, but will remain largely accessible for Russian users.

Not only will this further complicate ongoing legislation and regulation of crypto assets, but it has the potential of undermining attempts to punish and deter Russian military advancement. Current real-world examples already exist; North Korea and Iran both utilize cryptocurrencies to offload fiat assets and avoid similar sanctions. This will turn out to be a test on how free from regulation and centralizing cryptocurrency is, at least for those who hold them on exchanges. However, how much crypto is held on exchanges is debated; various reports estimate that only 6% – 12% of bitcoin is on exchange-based wallets.

The U.S., India, China, and Russia are all in the middle of how to deal with regulation and user protection of cryptocurrency. Those may change shape as the value of crypto as an anonymous and sanction-defying financial instrument could be challenged, with nations who are willing to heavily sanction Russia being cognizant of those who are not.

Ukraine and its people have formed a flourishing tech hub in Eastern Europe, and their own fintech industry association was in the middle of new initiatives to expand that hub to a global audience. These initiatives included blockchain and open banking, P2P payments, and online lending, as well as developing R&D offices for some of the largest tech companies in the world, including Google and Uber.

The above is just a small sample of the ongoing developments and unprecedented changes that have come to fruition and will continue to in the coming weeks, months, and years as the first major war in Europe since WWII has been sparked by Russia.

Sources: TSG, Reuters, Forbes,, Payments Dive, Wall Street Journal, CoinDesk, Bloomberg, The Paypers, Congressional Research Service, Baird,, Fortune, Protocol