By Andrey Ostroukh and Alexander Kolyandr
ST. PETERSBURG, Russia-- Visa Inc. and MasterCard have reached a
compromise agreement with Russian officials that would allow the
global card payment companies to continue operating in the
country.
"MasterCard and Visa will continue business in Russia," said
Andrew Torre,Visa's general director for Russia, Friday.
Russia's finance minister, Anton Siluanov, said both Visa and
MasterCard are ready to create their own Russia-based payment
operators, which will take around a year and half. Until then, the
two companies have agreed to cooperate with Russia's existing
payment systems, Mr. Siluanov said.
"They are ready to work within the framework of the new law, and
we are ready to cooperate with them and will find a solution," Mr.
Siluanov told reporters.
Ilya Ryaby, the head of MasterCard in Russia, said the
companies' proposals were taken positively by Russia's government
and that both sides have reached preliminary agreements, without
elaborating.
When asked if MasterCard would continue business in Russia, Mr.
Ryaby said "we will stay in Russia anyway."
In March, some Russian banks faced disruptions to bank card
payments with Visa and MasterCard after the U.S. enforced sanctions
in response to Russia's annexation of Crimea.
In an effort to avoid further disruption to card payment
operations, Russia's parliament passed a law that would force the
Visa and MasterCard to keep hundreds of millions of dollars at the
Bank of Russia as collateral against any future freeze.
The law envisages that Moscow could confiscate 25% of the
companies' average daily turnover in Russia in the past quarter if
their services are suspended again.
Visa and MasterCard officials have said the new legislation,
which will come into force on July 1, will dent their profits. The
law also stipulates that all the card operations in Russia should
be cleared within its borders through a national payment
system.
Mr Siluanov said Visa and MasterCard currently "have problems"
with the insurance deposit demanded by the law, but that both sides
would seek a solution. Earlier this week, Mr. Siluanov said that
Russian cardholders should be ensured against possible service
disruptions.
A finance ministry official who asked not to be named said
Thursday that Russia hopes to reach an agreement with Visa and
MasterCard that will result in creation of a payment system akin to
existing systems in France and Turkey. In these two countries
global card providers work together with their local peers,
processing transactions together.
When asked if Moscow would agree to a Belarus model, the
official said this option is less desirable but is acceptable.
Belarus issues international banking cards and processes all the
domestic transactions on its own but allows the global majors to
take over processing when the card is used outside the country.
Both sides indicated Friday that there is no final decision
which model will be chosen.
Russian banks have tried several times to create a local payment
system, but none of them was widely successful as customers
preferred globally recognized Visa and MasterCard. However, now the
national payment system has the support of the Kremlin and may be
created soon.
Write to Andrey Ostroukh at andrey.ostroukh@wsj.com and
Alexander Kolyandr at Alexander.Kolyandr@wsj.com
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