News

Russia retracts demand for massive security deposits from Visa, MasterCard

The government has dropped its requirement that the companies put up an estimated $2.9 billion in security deposits, but some restrictions still apply.

July 25, 2014

Please come back. All is forgiven.

Sort of.

Russia has withdrawn its demands that Visa and MasterCard pay massive deposits to operate in the country, and shoulder hefty fines should they again suspend operations with Russian banks.

In exchange for this concession, the government is requiring that the companies ally with a Russian payments system of "national importance" for transaction processing, a report by the Moscow Times said. The companies have until Oct. 31 to comply.

The new regulations from Moscow were prompted by the card companies' suspension of service to Russian banks that have been sanctioned by U.S. as the result of Russia's interference in Ukraine.

Currently, only one provider in-country — the National Settlement Depository — meets the government's definition of a nationally important exchange. However, Parliament intends to institute its own national payments system within the next six months, the Times said.

The card giants represent 90 percent of processed transactions in Russia and their removal would be a significant blow to the nation's payments system.