The war in Crimea will hit Visa and Mastercard hard

Russian President Vladimir Putin heads to China tomorrow to tighten relations with Beijing as ties worsen with the West over the Ukraine crisis. Along with Oil, gas and some 100 Sukhoi-Superjets Chin Union Pay is likely to be on the table as the Kremlin seeks to implements its own national payment scheme and keep the US administrators of Visa and Mastercard out of the economy.

For those of you that hadn’t noticed, China Union Pay has become, in the space of a very short period of time, the world’s largest debit car, processing over $3.5 trillion dollars in 2013 as this graph below from Neilson shows.

As well as local transactions in China, tourism is driving activity in Europe and throughout the region with the NAB now offering merchants acquiring capability in Australia

Following the suspension of Visa’s and MasterCard’s cooperation with Russian banks in March it is very likely that China Union pay will gain an additional few hundred million users very soon and continue their march on the global payments arena. All payments systems providers would do well to take note