Reuters: MasterCard moves card processing in Russia to local system

International credit and debit card company MasterCard has agreed to transfer card processing inside Russia to the local state-owned system, Russia’s Central Bank said on Monday. The agreement between MasterCard and the central bank-controlled National System Of Payment Cards (NSPC) was reached on Dec. 30, the bank said. This means MasterCard won’t need to pay a ‘safety fee’ to Russia’s Central Bank.

The bank added that the agreement marks an important step towards implementing the first stage of strategy for creating an operational payment clearing center to process intra-Russian card transactions for international payment operators.

The move was made in line with Russian law and will not affect card-holders, MasterCard’s representative was quoted as telling Interfax news agency. The company previously used its own processing system outside Russia.

Eventually, Russia’s Central Bank will become the sole center for settling MasterCard transactions, MasterCard CEO Ajay Banga told TASS in December. Currently, MasterCard and Visa have two settlement centers in Russia – Sberbank and VTB, both of which are state owned.

Russian authorities have obliged foreign card companies, which have stopped providing services for some Russian banks that are subject to Western sanctions, to move Russian processing to the local system or pay a hefty security deposit. The deadline for companies to switch to the local system is the end of March.

The West has imposed sanctions on several Russian banks over the Kremlin’s annexation of the Crimean peninsula from Ukraineand its support of pro-Russian separatists in Ukraine’s east. MasterCard and competitor Visa Inc said in December they could no longer support bank cards being used in Crimea, following U.S. sanctions. MasterCard has been obliged to switch processing to the new system in order to avoid handing over a massive security deposit. Visa is set to follow suit, according to finextra.com