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When is a payments network not a payments network?

When a network can be unplugged unilaterally what message does that send to the poor cardholder with the acceptance brand shining brightly on their card?

While Visa and MasterCard have successfully positioned themselves as a payments “utility”, their actions last week (Visa and MasterCard cut off Russia's sanctions-hit SMP Bank) were similar to an electricity company cutting off the power to the tenants in a block of flats because it has a dispute with the owner.

A few years ago there were many other payment options available, but these days access to electronic payments are as much of a necessity as electricity and running water.

The Russian payment market is both growing rapidly and hugely innovative. It’s relative youth also means it is largely unimpeded by a history of legacy software, meaning new services can be developed and brought online very quickly.

However this same rapid development also meant there was no established national switch, and Visa and MasterCard had done very well to secure a dominant role as the primary card networks. However their actions may well have provoked some unintended consequences as Putin vows to build Russian rival to Visa and MasterCard.



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