Card sharp

China Plays The Russia Card

No we don't take Visa, MasterCard, and certainly not American Express! Source: Bloomberg
No we don't take Visa, MasterCard, and certainly not American Express!
  • Why it matters

    Why it matters

    In Russia, Chinese credit card companies are moving in, offering cheap credit to needy consumers.

  • Facts


    • The E.U. and U.S. sanctions are allowing credit-card provider Unionpay to expand rapidly.
    • Thirty banks in Russia are switching to the new Chinese provider.
    • Visa and Mastercard are being pushed aside in Russia.
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In Russia, China’s firms are eagerly filling the gap left by sanctions imposed by the European Union and the United States. One company to profit is the Chinese credit card provider Unionpay.

Severe restraints were imposed on Visa and Mastercard affecting their operations in Russia after they put several Russian customers on the blacklist this spring. Banks in Russia are working on their own domestic system of payment. In the meantime, they are making a swift shift to the Chinese credit card system Unionpay.

The Chinese state broadcaster China Central Television reported on Wednesday that Unionpay has joined up with 30 new partner banks in Russia. “Trust in Visa and Mastercard is shattered,” said a representative of the Lait-Bank in Moscow. “People are looking for an alternative, and the only feasible one is the Chinese payment system.” Unionpay hopes to issue 2 million new cards in Russia, said a company representative.

The Chinese provider is already the leading provider in the world if measured by the number of its credit cards in circulation: 3.5 billion people carry the red, blue and green card, which is more than have been issued by Visa and Mastercard combined. This is thanks to China’s huge population: one third of all new cards is issued by Unionpay.

The system bears more resemblance to Germany’s debit cards rather than credit cards as they are known in the United States or the United Kingdom. The money is debited from cardholders’ accounts immediately after they make a payment, which is verified by a personal identification number and signature.

The Russian oil billionaire Gennady Nikolajevich Timchenko is already celebrating his possession of a Unionpay card. As a close friend of President Vladimir Putin, Mr. Timchenko was a target of the sanctions and his U.S.-issued credit cards have not functioned since March. “Unionpay, on the other hand, is outside the range of the Americans — and it works very well,” the billionaire said to a Russian news agency.

Mr. Timchenko wants to demonstrate how independent his country is. The fact is, however, that up to now Russia lacks its own payment system. Visa and Mastercard are the undisputed market leaders. President Putin has announced that the country’s banks are quickly going to come up with an alternative. Under the aegis of the Russian Central Bank, work is being carried out on a national system that is not expected to become operational before the middle of 2015. The banks are still arguing about what technology should be used.

Unionpay is rushing in to fill this gap. Russia’s sudden openness fosters the Chinese plan of building its own payment system into a recognized player on the world stage.

Unionpay already has a widespread presence in Asia. This year, the system is expected to process payments totalling the equivalent of €30 trillion. Payments can be made with the card in Japan and Indonesia as well. It is accepted by some 20 million dealers, around half of whom are in China, and the rest in other countries.

In Germany, 30,000 stores, including Kaufhof department stores and Douglas perfume retailers, already accept the card. It is possible to use the card to withdraw money at all automatic tellers of the Sparkasse savings bank, for instance.

Up to now, only 45,000 Unionpay cards are in circulation. A new surge of several ten thousand cards, however, is already underway. Up to now, for example, the Alfa Bank, Gazprombank and MTS Bank have announced their intention to introduce China’s Unionpay. But it will take some time to provide all customers with new cards, according to experts.

“People are looking for an alternative, and the only feasible one is the Chinese payment system.”

Spokesperson, Lait-Bank, Moscow

An even bigger hurdle is the number of places that accept the cards. Up to now in Russia, it is possible to pay with the card in only 100,000 stores—an unsatisfyingly low number. Still, it can already be used to withdraw cash from 30,000 automatic tellers.

Unionpay is headquartered in Shanghai. It is an organization for operating the payment system and is backed by the large Chinese banks. The Chinese government had promoted the establishment of national payment cards in the 1990s. It wanted on the one hand to make the country’s economy less dependent on U.S. financial-service providers.

On the other hand, it is a matter of customer service: the transactions are rapid and almost free of charge.


Finn Mayer-Kuckuk is correspondent in Peking. He may be contacted at

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