Visa, Mastercard and American Express have announced they will suspend all operations in Russia in protest at its invasion of Ukraine.

But Russia’s major banks have already downplayed the impact the move will have on consumers.

Shoppers will still be able to use the cards for purchases within Russia until they reach their expiry dates.

But Visa, Mastercard or American Express cards issued abroad will no longer work at shops or ATMs in Russia.

Clients will no longer be able to use their Russian cards abroad or for international payments online either.

Visa and Mastercard alone control about 90% of credit and debit payments in the world, outside of China.

Earlier, Russia’s central bank insisted that all Visa and Mastercard bank cards issued by Russian banks would continue to operate normally on Russian territory. That is because domestic payments in Russia are made through a national system and don’t depend on foreign systems.

Russia’s biggest state-backed bank, Sberbank, said its cards would still work “to withdraw cash, make transfers using the card number, and for payment at offline as well as at online Russian stores”.

Since 2015, the Russian government has required all domestic payment transactions in the country be processed there. This followed similar suspensions of operations by Visa and Mastercard in Crimea, following its annexation.

Several Russian banks suggested that they would start issuing cards that use the Chinese UnionPay system, coupled with Russia’s Mir payment network, to avoid any impact for consumers.

Farida Rustamova, an independent journalist who left Russia because of the invasion, criticised Visa and Mastercard’s decision, saying it would cut off people like her from much needed funds.

She told the BBC she had raced to withdraw cash following the news as she hasn’t set up a foreign bank account yet, and many others face the same problem.

“Now thousands of people, including not only journalists but opposition activists and even common people who are scared of Putin’s regime and are running from war will be cut from their little money.

“And the sad thing is this is exactly what Putin wants to happen.”

Both Visa and Mastercard had already announced that they would comply with sanctions introduced by Western countries since the start of the conflict.

In a statement, Mastercard also described the ongoing invasion of Ukraine as “shocking and devastating”.

The card company has operated in Russia for more than 25 years. It confirmed that it would continue to pay the wages of its 200 staff members there.

Visa added: “We regret the impact this will have on our valued colleagues, and on the clients, partners, merchants and cardholders we serve in Russia.”

It would not disclose how many Visa cards are in operation in Russia.

American Express called Russia’s attack on Ukraine “unjustified” and said it was also terminating all business operations in Belarus.

US President Joe Biden “welcomed the decision” during a phone call with Ukrainian leader, Volodymyr Zelensky, according to a white house readout.

‘Adding to financial turmoil’

Susannah Streeter, senior markets analyst at Hargreaves Lansdown, pointed out that the move came after the disconnection of Russian banks from the Swift international payments system and a dramatic plunge in the rouble.

“Bank customers in Russia may be able to keep using the cards until they expire, but the boycott means Russians abroad will see their payments rejected, with the shutting out of some big spenders also likely to hurt a raft of businesses reliant on their custom,” she said.

She added that China’s UnionPay is likely to be the alternative “system of choice” for Russian banks as it’s already accepted around the world, although not as widely as Visa and Mastercard.

“But it will take significant time to re-issue millions of cards, and will add to the financial turmoil in the country.”

The payments giants’ announcement comes amid a widening corporate backlash to Russia’s actions in Ukraine.

Inditex-owner Zara and French fashion houses LVMH, Kering and Chanel have all said in recent days that they would stop sales temporarily in Russia.

PayPal also said on Saturday that it had shut down services in Russia but that it would support withdrawals “for a period of time”.

This would ensure that account balances were dispersed “in line with applicable laws and regulations”, it said.

The Ukrainian government had been calling on PayPal to quit Russia and help its officials with fundraising.




chargebacks in retail

The pandemic has considerably impacted the retail industry in that there have been many changes in consumer behaviour and buying. Customers now expect and demand contactless payment options for in-store purchases. This was due to social distancing and health and safety measures as well as fears over handling cash. Today, there are more businesses that continue to refuse cash payments than ever before.

Another development is an increased demand to accept a wider variety of card types, in addition to traditional providers such as Visa and Mastercard. These can include JCB, AliPay, UnionPay, WeChat Pay, particularly as international travel begins to pick up.

However, more card transaction options also mean more potential chargeback issues for merchants to deal with. There is a tendency for professionals within the retail industry to “sweep it under the carpet” for a number of reasons, such as for instance a perceived lack of support from acquirers when it comes to chargebacks. This article will argue that this approach is not best suited to retailers and will potentially negatively impact them.

Onus Is On The Merchant

Consumers who are unhappy with their purchases are generally entitled to initiate a chargeback by filing a retrieval request provided they present their card issuer with a valid reason to do so, this in turn is processed by the card issuer for said transaction. What tends to happen is that the burden then shifts to the merchant. Indeed, the chargeback process is governed by the card issuer and consumers may raise a chargeback within 120 days of goods and services being provided. Whereas the merchant only has 30 days to formally contest the chargeback from the time it’s raised by the card issuer on behalf of the consumer and because the onus is on the merchant to ensure goods and services are as ordered and undamaged, it is also their responsibility to provide the rationale to justify any refusal on their part.

Merchants shouldn’t ignore a chargeback request– although many do – as this leads to the chargeback being upheld by default, like a parking ticket. As a result, the card issuer then takes the disputed amount of money from the merchant’s account and adds it to the consumer’s account. It is worth mentioning that chargebacks are designed not only to recover the cost of erroneous goods for the consumer but also the rectification and consequential costs. If the consumer can reasonably demonstrate the latter as part of the chargeback process, the claim will be upheld.

This is quite contentious because although many consumers fall victim to online fraud, not all cases are legitimate. Not to mention, in some cases, it’s hard to either prove or disprove abuse.

More Chargebacks As Online Shopping Increases

The volume of chargebacks is constantly increasing as consumers shift further towards online and this trend is likely to continue, particularly within the retail sector. This also means that retailers should be particularly aware of fraudulent claims or at the very least, disingenuous consumers.

It is worth pointing out, however, that the likelihood of a fraudster attempting a chargeback will depend on whether it is worth their time and effort. If the potential return is minimal it is unlikely they will attempt it. However, for higher priced items which come with a greater chargeback value, this is more appealing and enticing to the fraudster.

From a merchant’s perspective, the issue becomes what they can do to safeguard against it. As mentioned, if a merchant does nothing, the chargeback will be upheld. Some merchants simply don’t understand the process, others won’t challenge the claim under the assumption that the time required to do so is not economically viable. But there are simple solutions available to merchants; the most obvious step to prevent or at least minimise risk of chargeback is for retailers to be very thorough with goods purchased prior to distribution. Another option is to mandate consumers sign a form upon delivery to confirm the items received are undamaged, or “as sold”. This provides the merchant with some evidence which could be used to challenge a claim. However, this can be difficult to implement, depending on the nature of the goods purchased. What happens for example if the customer purchases a large number of tiles?


One thing is clear – the value and volume of chargebacks is growing as customers increasingly switch to online shopping. This trend is likely to continue as the world settles into a post-pandemic ‘new normal’ and makes it even more important for retail professionals to take the issue of chargebacks as seriously as possible. Given the responsibility to demonstrate that purchased items have been delivered in good condition relies heavily on their shoulders, it is more important than ever for retailers to do everything possible to address the issue, adopting a “prevention rather than cure” philosophy in the process.

Retailers should look into solutions to reduce the impact of chargebacks. Whenever possible, merchants should ask their acquirer for advice and assistance. Acquirers often have specialist teams in place who can advise merchants on how to navigate the process and prevent difficulties which may, in turn, help prevent or pre-empt such issues.