Big blow for Swift as UnionPay comes to Russia's rescue

Big blow for Swift as UnionPay comes to Russia's rescue

Not long ago, a Swift ban of Russian banks would have spelt trouble for everyone in the country but today UnionPay is at the rescue.

On Sunday, several Russian banks announced plans to start issuing cards using the Chinese UnionPay card operator system. The rebuke of the Western nation’s throwing Moscow out of the Swift system is a win for Russia. And a win for China. It is also a major defeat for Western politicians.

Altogether, the Western governments and their businesses would probably find that banning Russia from all transactions and businesses in Europe may come at a heavy cost. This could spark a shift from countries that are not against Russia in the war over Ukraine.

However, the West could also impose a ban on UnionPay in Europe, the U.S. and impose sanctions on all those who would support the Chinese company.

Russia Today says the step, which came shortly after Mastercard and Visa pledged to cease operations in Russia and disconnect all the country’s banks from their payment systems, will enable the holders of new cards to use them for paying and withdrawing cash abroad.

This could become the latest target of the European and American ‘sanction’, a tool that is becoming less and less effective within the electronic world.

China-Russia trade

Russia is a big economy, though it is not as big as the EU or the U.S. but it is huge enough for its supporters to benefit from trade and business with Moscow.

For example, the latest statistics show that mutual trade between Russia and China in the first two months of 2022 increased by 38.5% year-on-year.

Trade turnover in January-February reached $26.43 billion.

Russian exports to China jumped by 35.8% over the period to $13.8 billion, while Russia imported $12.6 billion worth of goods and services from China, an annual growth of 41.5%.

Last year, Russian-Chinese trade peaked at a record high of over $148.8 billion, up 35.8% compared to 2020, when it dropped by 2.9% due to the Covid-19 pandemic.

With the polarisation of trade and that of the financial system, Russia would seek to work with friendly countries to compensate for the savage sanctions imposed by the west.

Biggest lending bank too

Russian banks, including Sberbank, Russia’s biggest lender, as well as Alfa Bank and Tinkoff issued announcements regarding the switch to UnionPay.

Some of Russia’s banks, like Pochta Bank, Gazprombank, Promsvyazbank, Sovcombank and several other minor banks had been previously working with the UnionPay card operator’s system.

UnionPay, an international payment system founded in 2002, received international status in 2005.

Headquartered in Shanghai, the company reportedly operates in more than 180 countries across the globe, including Switzerland, Greece, Italy, Spain, Germany, Mexico, Cyprus, Thailand, India, Israel, Portugal, Croatia, Poland, Serbia, Hungary and Austria.

World Future as an organisation is against all wars unless it is the last resort to defend innocent civilians.