In late March, MasterCard and Visa froze service to cards issued by Bank Rossiya, after it was named in US sanctions. President Putin declared that Russia should limit its exposure to political risks in the financial system and build its own national system supporting electronic card payments.
Last week, the government decided to establish a Russian national clearing system as a separate corporation controlled by the Central Bank of Russia (CBR). The National Payment Card System (NPCS) would process all card payments inside the country; it is also likely that NPCS would serve as a central processing hub supporting all international card payments, which would allow Russia to bypass international payment systems.
More than twenty years after the breakdown of the command economy, Russia remains a cash-based society in transition to a financialised capitalism: 81 per cent of operations with plastic cards are cash withdrawals. Only 19 per cent are for card purchases. Card payments also account for 59 per cent of total transaction volumes, with the remainder paid for in cash.
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