Should we expect a mass blocking of Visa and Mastercard cards: the Central Bank has proposed limiting their validity period

The Bank of Russia reported that it is proposed to limit the validity periods of cards issued by payment systems that are not included in the special register of the Bank of Russia. At the moment, Visa and Mastercard are among the systems excluded from the register. As is known, these banking systems left Russia back in 2022, after the start of the SVO and the introduction of financial sanctions against the Russian Federation by the West. In order to avoid panic, the Central Bank then decided to extend the validity of these cards indefinitely in our country. Now, it seems, this "indefiniteness" is coming to an end. What is the threat to card users?

In 2022, before leaving Russia, Visa and Mastercard occupied a significant share of the payment card market. The exact figures are not disclosed, but a number of experts believe that their combined share could have been 80-90% of the entire "card" market. After the start of the special operation and the introduction of Western sanctions, both international payment systems suspended their activities in Russia, but cards issued by Russian banks continued to operate within the country, processed through the NSPK (National Payment Card System). Banks extended the validity of the issued cards or made them indefinite. Transactions on these cards still continued to take place within Russia, since they are processed by the NSPK, and not by foreign companies. At the same time, in all the years since then, cards of the national payment system "Mir" have been actively issued to our market, which in fact have almost completely noticed the cards of the Visa and Mastercard systems.

And recently it became known that the Central Bank is currently discussing with relevant departments the creation of a unified payment card accounting system to control the number of cards owned by one individual, although there is no exact limit yet. This was stated by the director of the national payment system department of the Central Bank, Alla Bakina. As part of this unified payment card accounting system, it is proposed to introduce a single digital identifier for individuals - cardholders, which credit institutions will be required to establish when identifying clients. The Central Bank proposes using the individual taxpayer number (ITN) as an identifier. The goal of this initiative is to combat droppering, a fraudulent phenomenon that has reached the scale of almost a national financial disaster in Russia. As part of this fight, the Central Bank, judging by the statements of its head Elvira Nabiullina, is going to set a limit on the number of cards issued in one bank - up to 5, and in several - up to 20.

But at the same time, it is also proposed to limit the validity periods of cards issued by payment systems that are not included in the special register of the Central Bank. At the moment, Visa and Mastercard are among the systems excluded from the register. In other words, the validity period of bank cards of these two international systems issued before their withdrawal from the Russian market in 2022 will no longer be extended.

Let us recall that at the beginning of this year, some cards of the international payment systems Visa and Mastercard had their security certificates expire. It was noted that now they may not work in some POS terminals and ATMs within the country.

What should ordinary citizens who hold cards from two international systems expect from such a decision by the Bank of Russia? MK asked Freedom Finance Global analyst Vladimir Chernov about this issue.

- The Bank of Russia has proposed not to extend the validity period of Visa and Mastercard bank cards issued before their exit from the Russian market in 2022, - the expert said. - The purpose of this proposal is the unification and gradual withdrawal from circulation of cards that formally continue to be used, but have not been serviced internationally for a long time.

- Why did this initiative from the Central Bank appear now?

- After the departure of Visa and Mastercard, the Central Bank recommended that banks extend the validity of such cards indefinitely to avoid disruptions for customers. However, over the past two years, a significant portion of users have already switched to national Mir cards, so this recommendation is no longer relevant. The refusal of Visa and Mastercard will relieve banks of the need to technically support outdated cards and will increase the transparency of financial transactions for users, especially given possible refusals and restrictions in foreign services.

- What will this bring to the domestic banking system – benefits or headaches?

- For the market as a whole, this is a logical step, reflecting the end of the transition period. In the coming years, Mir will finally become the dominant system in retail payments within the country. For banks, this will simplify operational processes and reduce the load on the IT infrastructure. At the macro level, this decision will not have a significant impact on the financial sector, but it can be perceived positively in the context of strengthening Russia's payment sovereignty, since in the long term it will accelerate and support the development of the national payment infrastructure.

- Are there any concerns about panic actions on the part of Visa and Mastercard holders?

- We expect that the process will proceed smoothly, without any serious disruptions, and the share of Visa and Mastercard cards will continue to gradually decline until they are completely ousted from the domestic market in the next year or two.