Selena Li

HONG KONG (Reuters – Several Russian banks will issue payment cards which use both the network of China UnionPay and Mir. Visa Inc (NYSE:) MasterCard Inc was among the other Western businesses that suspended operations in Russia.

Mir and UnionPay were among the few Russian options for payments to foreign countries after Russian banks became isolated from global financial systems following Russia’s invasion. Russia describes its actions in Ukraine as a “special operations”.

While many Western countries have been critical of Russia’s behavior, China, an ally, has resisted direct criticism. This allows Chinese companies like UnionPay to carry on business with Russian partners as normal.

UnionPay cards are already being issued by several Russian lenders. The Chinese payment service, however, is wary about cooperating with Russian sanctioned banks, as this could result in it being sanctioned.

UnionPay has not responded to a Reuters inquiry for comment.

UNIONPAY: WHAT DO YOU MEAN?

China approved in 2002 the creation by UnionPay, a group of banks operators from China, of a central bank to facilitate domestic interbank transactions across various platforms.

UnionPay, which is funded by China’s top commercial lenders and the government, clears and settles all payments with licensed banks. It also issues debit and credit cards.

It is owned by 87 shareholders that include affiliates of People’s Bank of China and commercial lender such as Industrial and Commercial Bank of China Ltd and China Construction Bank OTC: Corp and rural credit providers.

Before China opened up foreign payment networks, it held the monopoly. It has been expanding rapidly overseas in recent years.

According to data from Nilson, UnionPay was the first in number of worldwide cards with 9.4 billion at the close of 2021. Visa had 3.7 million and Mastercard, (NYSE:), 2.5 billion.

HOW DID IT GROW INTERNATIONALLY

UnionPay saw an increase in Chinese tourists and decided to develop offshore connections with merchants and banks. The first was in Hong Kong, 2004.

UnionPay International, an overseas arm of UnionPay, was founded in 2012. It is a partnership with more than 2500 institutions all over the globe, which allows for card acceptance in 180 locations, UnionPay’s website revealed.

UnionPay cards can be issued in more than 70 countries and territories, the company said.

Some European financial companies, such as HSBC Holdings PLC (NYSE 🙂 have been involved in its expansion. Barclays (LON: ) PLC Travelex, Moneycorp and Travelex. UnionPay card holders are able to withdraw sterling in Britain at Barclays cash machines and Travelex cash machine.

UnionPay cards holders can withdraw money from cash machines at HSBC in Britain.

UnionPay is quickly catching up to global competitors in absolute volumes processed. This is largely due to the growing purchasing power of Chinese buyers both domestically and internationally.

Nilson data indicated that 40% of the global card purchases volume were made via Visa by 2020. UnionPay was close behind at 32% followed closely by MasterCard (24%).

HOW BIG IS UNIONPAY RUSSIA’S?

As of March 20,21, UnionPay cards were accepted by more than 55 million businesses worldwide. UnionPay statements revealed that 95% of Russia’s merchants accept UnionPay cards. More than 1.6 million Russian point-of sale terminals are compatible with UnionPay QuickPass payment technology. According to the statement, Russia issued over 4 million UnionPay card.

UnionPay has been a popular choice for Russian banks after Western sanctions were imposed.

UnionPay has been asked by the National Bank of Ukraine, a UnionPay Partner, to stop processing Russian payments and transactions involving Russian bank cards that are used in Russia.

Kyrylo Shychenko, NBU Governor, stated in a March 17th statement that she asked for your assistance in helping to restore peace in Ukraine.