Visa and MasterCard face heavy price for Russian business
06 May 2014 | 9200 views | 5
Visa and MasterCard will have to cough up nearly $4 billion in security deposits to Russia's central bank if they want to continue operating in the country, under a new law signed by president Vladimir Putin.
In March, Visa and MasterCard stopped processing transactions for several Russian banks because of US sanctions designed to put pressure on Putin after he moved to annex the region of Crimea.
The Russian president has responded with a new law that will create a national payments system to compete with the American-owned giants, which currently process around 90% of all card transactions in the country.
In addition, the pair have been told that if they wish to carry on working in Russia they will need to deposit collateral with the central bank equivalent to the value of two days of processing volumes - around $3.8 billion.
According to the Moscow Times, the amount will be payable in eight quarterly payments starting from July.
The new law also means that the companies will face fines of up to 10% of the deposit per day if they unilaterally cut off services to a Russian bank - which could prove costly if the US government makes anymore sanctions moves.
In addition, Visa and MasterCard will have to keep all of their transaction data within Russia's borders, in a nod towards data privacy concerns Putin has raised.