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Visa and Mastercard Cut Services to Russian Banks

The firms are working to comply with international sanctions against Russia and humanitarian donation efforts in Ukraine

Visa and Mastercard announced they are stopping services to Russian banks in an effort to comply with U.S. sanctions imposed on the country after the Ukraine invasion.

The sanctions are intended to block Russia’s government from accessing the global financial system. The financial restrictions have included freezing assets at Russia’s Central Bank. Other Russian banks have also been impacted by the sanctions, including state-owned VTB. 

The international sanctions have also prohibited U.S. citizens from participating in transactions with Russia’s Central Bank, the National Wealth Fund, and the Russia Ministry of Finance.

On Monday, Mastercard issued a statement that said it has “blocked multiple financial institutions from the Mastercard payment network.” It added that it will continue to work with regulators to comply with requirements “as they evolve.”

Similarly, on Monday, Visa said it is working to comply with the sanctions.

“Visa is taking prompt action to ensure compliance with applicable sanctions and is prepared to comply with additional sanctions that may be implemented,” Visa said in the statement.

The sanctions have directly impacted the lives of everyday Russians, who should only expect the economic situation to get worse in the next few weeks and months.

On Monday, the Russian ruble dropped about 30% in value against the U.S. dollar. It saw some rebound in value after Russia’s central bank moved to increase its key interest rate to 20% — more than double its previous rate. However, economists forecast that the sanctions will diminish Russia’s economic growth for the foreseeable future. 

“Russian financial markets are under heavy pressure from the West’s sanctions, which will damage Russia’s GDP significantly,” said Adam Slater, lead economist at Oxford Economics. He expects the sanctions to reduce the Russian GDP by as much as 6%. 

According to the statements, both Visa and Mastercard are donating $2 million each toward the war-time humanitarian efforts in Ukraine. 

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