Payments Industry Response To Russia’s Invasion

March 4, 2022
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Russia’s conflict with Ukraine has sent shockwaves throughout Europe and the rest of the world, and many payment and fintech firms have had to take a stand.

Russia’s conflict with Ukraine has sent shockwaves throughout Europe and the rest of the world, and many payment and fintech firms have had to take a stand.

This week, cross-border payments company Wise and US-headquartered remittance processor Remitly have suspended their money transfer services in Russia.

It was just a week prior that Wise had limited daily transfers to Russia to £200. It has also capped the amount that Ukrainians are able to receive.

“Recent developments in the region mean it’s more difficult to operate our service. But as long as we are able to do so, we will continue to offer our service to people needing to send money to UAH [Ukraine],” the company said in a blog post.

The company has also said that it will remove caps as soon as this is possible.

Fees on transfers to Ukraine were also waived by the company for 20 hours from 5pm on February 25. “We know that financial support is important in a time of crisis and we want to help. That’s why we waived fees on over 500,000 GBP in volume for personal transfers to UAH to help customers who may have emergency needs,” the company said in the blog post.

Revolut has also taken action following the start of the conflict.

"This war is wrong and totally abhorrent. I am horrified and appalled at its impact, and I add my voice to those around the world calling for an immediate end to the fighting, and a commitment to diplomatic solutions,” said Revolut's Russian-born chief executive Nik Storonsky.

Storonsky’s fintech has said that it will match Red Cross donations made via the Revolut app. So far, £1m has been raised by users.

PayPal has also stopped accepting new users from the world's largest country, a spokesperson announced this week.

However, in an media interview on Wednesday (March 2), Ukraine's deputy minister for digital transformation, Alexander Bornyakov, called on PayPal to take more sweeping action and shut down entirely in Russia.

Paysera, meanwhile, went one step further in its action after the conflict began.

Last week, the Baltic fintech announced that it would no longer process transactions in Russian roubles, closed its Russian clients' accounts and restricted money transfers to and from Russian banks. "While we understand that we are not a giant in the financial market, we do want to send the message that we can all have an impact through the choices we make,” said Gintautas Mežetis, Paysera’s Lithuanian chief executive.

Sanctions ramp up

This follows new sanctions over the weekend against the country in response to its invasion of Ukraine, which have begun to be rolled out across Western jurisdictions such as the US, EU and UK.

Other countries, including Singapore, Australia, Japan and South Korea have also followed suit.

On Wednesday, the EU unveiled seven banks that it will cut out from the SWIFT messaging system.

The European Council, consisting of the trading bloc’s member state leaders, agreed to prohibit the provision of specialised financial messaging services to: Bank Otkritie; Novikombank; Promsvyazbank; Rossiya Bank; Sovcombank; VNESHECONOMBANK (VEB); and VTB BANK.

Although it is notable that Sberbank, Russia’s largest bank, was not included on the list.

In a press statement on Wednesday, Sberbank announced: "In light of the current situation, Sberbank has taken the decision to withdraw from the European market. The group’s subsidiary banks have faced an exceptional outflow of funds and a number of safety concerns regarding its employees and offices."

Furthermore, due to a directive from the Central Bank of Russia, Sberbank cannot provide liquidity to its European subsidiary banks.

The EU’s prohibition on the seven Russian banks from accessing SWIFT will enter into force on the tenth day after the publication in the Official Journal of the EU, and will also apply to any legal person, entity or body established in Russia whose proprietary rights are directly or indirectly owned for more than 50 percent by the above-mentioned banks.

In addition, the sale, supply, transfer or export of euro-denominated banknotes to Russia or to any natural or legal person, entity or body in Russia, including the government and the Central Bank of Russia, or for use in Russia, has been prevented.

Click here to view VIXIO PaymentsCompliance's new Ukraine Conflict Tracker, which monitors critical developments around the current conflict in Ukraine that could potentially affect your business.

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