Visa, Mastercard, and Russian Commerce

It’s very easy to keep faith in modern electronic payment systems when there is nothing going wrong with them. Russians in March 2022 did not have the same luxury. Due to the country’s involvement in the war with Ukraine, Visa, MasterCard, and several other payment platforms punished all Russians. They did this in three separate ways. They first stopped letting Russian cards be accepted by vendors outside of Russia, then they stopped letting non-russian cards be used to purchase things in Russia. Additionally, transfers between Russian banks and international banks became frozen. Thankfully the Russian government had been working on their own payment technology for years, but Russian consumers were still heavily hit by the inability to purchase from abroad. This situation highlights the fundamental fragility of financial technology and its subservience to governmental regimes. 

The stripping of card access highlights a key monetary mental error that  is rarely checked. People repeatedly confuse electronic transfer systems with money when in reality they are only a representation of it. This works very well in most situations because it speeds up transfers and allows people from many different countries to interact in ways that they wouldn’t be able to otherwise. Trust in an electronic payment system had real consequences for Russian consumers. E-commerce suffered a strong decrease as a result of the payment system cutoffs, as Russians were effectively cut off from the majority of the Internet. Goods which would have been easily accessible in the past became only achievable for oligarchs with smugglers or people who had access to precious metals or other forms of payment. The drop in value of the Ruble coming from general macroeconomic Russian instability meant that even Russians who avoided border laws suffered heavy financial losses. As a result of the entire network of online trade becoming disrupted, Russian versions of all online services started to become available. The instability of online payment platforms disconnected Russia from the outside world and…