Global: Visa, Mastercard block services to Russian banks targeted by sanctions

Visa and Mastercard said they are blocking services to Russian banks, complying with U.S. sanctions levied on the nation amid its war against Ukraine.

The crippling sanctions are designed to block Russia from tapping the global financial system, ranging from freezing assets at major Russian banks — including the state-owned VTB, and prohibiting U.S. citizens from participating in any transactions with Russia’s Central Bank, its National Wealth Fund or the Russia Ministry of Finance.

In a statement issued Monday, Mastercard said it has “blocked multiple financial institutions from the Mastercard payment network.” It added that it will continue to work with regulators to comply with requirements “as they evolve.”

Visa, meanwhile, on Monday said it is complying with sanctions. “Visa is taking prompt action to ensure compliance with applicable sanctions, and is prepared to comply with additional sanctions that may be implemented,” it said in the statement.

The sanctions are already wreaking havoc on the lives of ordinary Russians, who can only expect the economic situation to worsen in the days and weeks ahead, experts say. The ruble fell about 30% against the U.S. dollar on Monday to less than 1 cent. It regained some ground after Russia’s central bank more than doubled its key interest rate to 20% to shore up the currency, but economists are forecasting that the sanctions will pare Russia’s economic growth.

“Russian financial markets are under heavy pressure from the West’s sanctions, which will damage Russia’s GDP significantly,” said Adam Slater, lead economist at Oxford Economics, in a Tuesday research report. He predicts that the sanctions will shave the nation’s GDP by as much as 6%.

Both Visa and Mastercard said they are donating $2 million each toward humanitarian efforts in Ukraine.