New Russian law sets national control of bank card transactions

The law took the form of amendments to existing legislation adopted in 2011.

First deputy chairman of the Duma Committee Vladislav Reznik has declared that the new rules will ensure “uninterrupted transfers of monetary funds within the payment system on the territory of Russia.

The document outlines a mechanism of sanctions for failures by international payment systems to process payments. It also contains an amendment on RUB settlements in the foreign transactions of Russian companies and one on the right of Russian banks to close the accounts of US residents to protect themselves from sanctions.

The issue of a national payment system came to the forefront after the US imposed sanctions on Bank Rossiya in March 2014, causing Visa and MasterCard to refuse to service its bank card transactions as well as those of its subsidiary Sobinbank.

According to the national payment system will be created on a base of Russian development and technology, but will be compatible with Visa and MasterCard.

At the first stage, Russian consumers will not be able to use bank cards based on the national payment system for transborder purchases, “since that is covered by international payment systems.” But performing transactions inside the country – in stores, to get cash at ATMs, to make purchases on the Internet inside the country – will be possible.

According to Central Bank data, 217 million cards have been issued in Russia. Furthermore, 95% of them are associated with international payment systems like Visa and MasterCard and 90% of the settlements made using the cards are within Russia.