FX.co ★ Russia switches to idea of national payment system

After Visa Inc., the world’s biggest bank card network, had reported quarterly results, Chief Financial Officer Byron Pollitt noted that a number of transactions in Russia tumbled amid growing fears of the next package of sanctions. Mr. Pollitt said in the statement, “The Visa staff have become hostages of the U.S. and Russian policy. Russia has issued 100 million visa cards so far. No one, Russian nationals in particular, is interested in losing a possibility to use these cards.” Besides, the Visa management has been closely monitoring developments of domestic payment systems in other countries as it has been a matter of great concern. Recently, lots of countries have set about developing and bolstering their own competitive payment alternatives. “Every miller draws water to his own mill,” the proverb says. Meanwhile, Visa considers this trend a serious threat to its business in the future. Visa’s net profit rose 26% or $1.6 billion for Q1 2014. It managed to gain such impressive results despite the fact that it had to increase operation costs due to the two large-scale promo campaigns, the Olympic Games in Sochi and the pending football world cup in Brazil. By the beginning of 2014, 2,229,000 visa cards had been issued worldwide, which is 6% more than a year earlier. Russia’s government has been dealing vigorously with the matter to create the national payment system. This task was set by President Vladimir Putin after Visa and MasterCard had halted servicing transactions of the bank Rossiya, SMP Bank, and other lending institutions, thus supporting the sanctions imposed by the West. Russia’s Prime Minister Dmitry Medvedev believes that such hawkish actions should not be left unpunished. “Foreign partners have barred some Russian banks from international payment systems. No doubt, they have infringed agreements with payment systems’ providers. I strongly believe that such gross infringement should not be left unpunished,” Dmitry Medvedev stated.