UnionPay cards will not be in Russian banks that are under sanctions

Over the past few days, several major Russian media have reported that the Chinese company UnionPay has banned sanctioned Russian banks from issuing their cards due to the risk of falling under secondary sanctions.


Also, the Bloomberg news agency, citing an internal informant, reported that the UnionPay payment service will not cooperate with Sberbank, Russia's largest bank. Although it was previously assumed that Sberbank agreed to issue UnionPay cards that would support the work of the Chinese UnionPay payment service, however, later the Chinese company refused to provide Sberbank with access to its service due to fear of sanctions.

RBC, one of the largest media in Russia, released an article stating that the restriction on the use of UnionPay cards applies to Alfa-Bank, Otkritie and VTB, as well as Promsvyazbank, which issued UnionPay cards even before the imposition of sanctions, also more will not be able to do this, and Sovcombank refused to issue a Halva card based on UnionPay.


According to RBC, the main reason for refusing to cooperate is the fear of falling under secondary sanctions. UnionPay freezes negotiations with some partners without explanation. As one of RBC's sources pointed out: "The project is temporarily on pause for the time being, they do not officially confirm the connection with the sanctions, they say that it is on pause until further notice."


RBC sent requests to UnionPay. The company replied that it continued to cooperate with Russian banks that were not subject to sanctions, since UnionPay operates in the United States and uses US dollars in its operations. These factors extend the effect of sanctions on UnionPay, despite the fact that the payment system was created in China.


Previously, even large European banks such as Barclays and UniCredit were forced to enter into pre-trial agreements with OFAC (sanctions department of the US Treasury Department) to pay hundreds of millions of US dollars in fines in connection with dollar transactions involving persons who are under sanctions, it is likely that UnionPay because of this, it has so far decided to refrain from cooperating with sanctioned banks in Russia.