RT: Visa, MasterCard to pay $3bn to stay in Russia – Morgan Stanley

Published time: May 15, 2014 15:30

Reuters / Jonathan Ernst

Reuters / Jonathan Ernst

Under Russia’s new legislation, Visa and MasterCard will have to pay $3 billion in ‘security fees’ to continue operating in Russia, more than five times higher than the companies combined revenues, a new Morgan Stanley report says.

Under the new plan, Visa will be required to pay Russia’s Central bank $1.9 billion, and MasterCard will have to fork out $1 billion, according to an estimate by Morgan Stanley, Kommersant reported on Thursday.

Russian President Vladimir Putin signed a law on foreign payment systems on May 5 that requires foreign payment systems to be levied at 25 percent of an average amount of transfers profit during one calendar day in Russia, to be paid each quarter to the Central Bank. The law will be enacted on July 1.

Morgan Stanley has calculated that it is unprofitable for both Visa and MasterCard to continue to work in Russia.
The Morgan Stanley Report titled “The Russian Bear: Impacts of V and MA” said the fees will be more than five times the two companies’ combined annual revenue in Russia. Analysts at Morgan Stanley report net sales for Visa to be between $350-470 million, and $160 million for MasterCard.

A possible loophole would be to create a separate, non US-owned entity to run the Russian Visa and MasterCard divisions. Visa already has such an operation in Europe.

“MasterCard has worked in Russia for more than 20 years. We are continuing to study all components of the new law, and are sure that some of the provisions will not only create serious difficulties for our operations in Russia, but will damage the Russian market of electronic payments in the long-term,” the company told Kommersant in a statement, adding they “continue to work closely with government agencies, financial institutions, and commercial enterprises in Russia.”

Visa has declined comment on the report.

The first wave of US sanctions prompted a mix-up with Visa and MasterCard, which led to unlawful payment freezes at three Russian banks in March and demands from the Russian government to compensate for the mix-up.

The $3 billion (100 billion ruble) estimate is much higher than the original 80 billion ruble lawmakers previously discussed slapping the companies with.

Visa and MasterCard control 90 percent of the Russian payment systems market, but Putin said that both companies will lose market share if there are any future payment disruptions.

The creation of a National Payment System (NPS) for Russia is being worked out by the country’s central bank, with the government hoping to complete work on the project within the next six months.

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2 Responses to RT: Visa, MasterCard to pay $3bn to stay in Russia – Morgan Stanley

  1. Trex says:

    Throw the crooks out, once and forever. Let the new Russian payment system take over and show the world there IS another way to do business. If Visa/MC wants to stay in Russia, then the Russian cards need to be accepted by all throughout the west. We know that won’t happen, so – bottom line – throw the crooks out and be done with it. The rest of the world outside the US will then have a choice regarding which payment system to use: Russian or Rothschild. My guess is firstly they will kick and scream over letting in any competition, and secondly they may not survive it as people are fed up with being forced into unbelievable interest rates, while we get nothing for interest on our money. That will be the second shot heard round the world. A work-saving suggestion to Kerry: go ahead and write up a sanction against the big four NY banks directly, as thats where the sting will ultimately be absorbed anyway. The sanction’s effects on Russia are proportionally small as the lions share of effects ricochet back into the EU or Wall St. I might add that the more sanctions are made, the less impact they have, as the sum effect is to drive business away, while the west is weaned of increasing amounts of business transactions. More sanctions = quicker death to Wall St. So knock yourself out Kerry. Just go crazy with sanctions and watch our house of cards collapse on your head. The next 1kg silver medal will show Putin smiling ear to ear.

  2. Susanne R says:

    What did VISA/Mastercard/Discover expect after all the sanctions being thrown up against Russia by USG who is owned by very same bankers. How can these arrogance-driven cabalist banksters (which makes them morons) have a beef at all? They caused this shit! And it’s now backfiring in their faces. How could they have possibly believed there would be a different outcome? Their complete arrogance has blinded them.

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