The United States recently prohibited U.S.-registered companies from investing in Crimea or providing services to firms operating there. This prohibition went along with sanctions imposed as a result of Russia’s annexation of the peninsula from Ukraine. The consequences for the people of Crimea and parts of Ukraine are now being exacerbated by Visa and Mastercard ‘s suspension of regional bank card services.
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Visa, in a recent statement, has said the sanctions mean they can no longer legally service customers in that region. The fallout could be very bad as Visa and Mastercard service most of the bank cards and debit cards world wide. Suspending card services will force people back to writing checks and in some cases carrying cash, both of which are also practices under fire. The move will also make travel more difficult in the region as many people pay for their hotels and transportation with their Visa or Mastercard bank cards.
Russia’s moves in the region, which includes support of the rebels in Ukraine, have had a destabilizing effect on people living there. The region was already in turmoil following the shooting down of Malaysia Airlines MH17 passenger jet.
People forget just how dependent they can be on banks and card providers like Visa and Mastercard to have access to their money. Simple sanctions hurt the economies and people of the region far more than it hurts the Russian government. Eventually, people demand changes in order to have access to their money and safe banking which is always a risky proposition in an economically unstable country. With the Russian Ruble falling in value, this latest blow does nothing to help the situation in the region.
What do you think about Visa and Mastercard cutting off services in the region?
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