Several United Arab Emirates (UAE) airlines have resumed accepting Russian cards for ticket purchases, Russia Today (RT) reported on 2 April. The purchases are made through Russia’s Faster Payments System (SBP).
Emirates, Air Arabia, and Flydubai are now accepting payment by MasterCard and Visa cards issued by Russian banks. Turkish Airlines has reportedly planned to accept such payments from its customers as well.
In response to the Russian intervention in Ukraine last year, Visa and MasterCard joined many western firms in halting operations in Russia as US-imposed sanctions on the country intensified. Cards issued by the two major international payment system companies through Russian banks continued to work domestically but were no longer accepted abroad or on foreign websites.
The Faster Payment System (SBP) was launched by Russia’s central bank in 2019 in an effort to make the country less reliant on western financial institutions. Customers can make transfers between banks using a phone number tied to an account. Card-to-card transfers are also available for transactions within a bank.
Tickets for Air Arabia flights purchased through the SBP system are charged a 6 percent commission for each ticket issued. Reservations can be made on the Air Arabia website and are confirmed following a call with the airline’s customer service representatives.
Flydubai reportedly conducts transactions through third-party agents and charges a fee of 2,000 rubles. Emirates allows customers to pay for tickets using a QR code system.
As the Financial Times reported, Russia’s effort to build a new payments system began after western sanctions were imposed on Russian banks following the violent coup in Maidan Square in 2014 that toppled Ukraine’s pro-Russian president and following Russia’s subsequent annexation of Crimea.
“For the first time in post-Soviet Russia, the events of that year demonstrated how financial sanctions can impact not only the individuals but the wider economy,” said Anastasia Nesvetailova, head of macroeconomics and political development at the UN’s Conference on Trade and Development.
Now, Russia is benefitting from the foresight it exercised in building an alternative payments system years previously.
China has also benefitted, as Russian consumers seeking to make international transactions have increasingly turned to cards issued by Chinese company UnionPay in cooperation with Russian banks.
The Financial Times notes further that as a growing number of countries, including Brazil and India, embrace alternative payment networks, the efficacy of western sanctions will likely be reduced.
“A number of countries have a critical dependence on Mastercard and Visa,” said Nicolas Véron, a senior fellow at the Peterson Institute for International Economics. “After these were weaponized, maybe the consensus will emerge that UnionPay is more reliable.”
Ola Oyetayo, chief executive of payments platform Verto, said Russian banks may not return to using western financial services firms. “In the long term, they may say once bitten, twice shy — they may not switch back even if they become an option again,” Oyetayo said.