There’s loads of twists and turns with Putin’s war on Ukraine. Three of them are PayPal, Via, and MasterCard’s responses.
It’s no secret that Russia’s president, Vladimir Putin, is not having the greatest time with Ukraine right now. Plenty of speculation suggested he was expecting Ukraine to simply fold under the pressure of the Russian military within days and its citizens somehow magically welcoming them with open arms. None of above happened. Ukraine citizens responded with an incredible amount of resilience and an amazing level of resistance to Russia that surprised many.
Obviously, nothing about the situation in Ukraine is pleasant. Over a million people displaced as civilians run for their lives to neighbouring countries – the biggest being Poland. Russian rocket bombardment continues as civilian structures are continuously pummelled. The death toll probably won’t be accurately calculated for quite some time. Ukraine citizens have taken the brunt of Russian forces, resulting in stories that are often extremely difficult to watch, read, or listen.
Western countries like the UK, the US, and Canada have been quite careful about how to approach this. Putin has already threatened to fire nuclear weapons as it is. Ukraine is not a member of NATO which makes it impossible to find a way to get boots on the ground in any reasonable way. At the same time, there is a collective understanding that what Putin has done is wrong.
An unprovoked attack of another nation isn’t going to happen with other nations standing by and doing nothing. In response, there were significant sanctions that were placed on Russia in response. The affects of those sanctions were quickly felt across the Russian economy. The value of the Ruble has plummeted and interest rates spiked to the almost unimaginable level of 20% – in an era where rates below 1% seem so normal now. A more significant response floating around in the US is the possibility of banning Russian oil and natural gas – a major part of the Russian economy.
Russian citizens are already feeling those affects on the economy. Of course, for a number of them, they don’t need those impacts on the economy to protest the way. Already, thousands showed up on the streets, defying threats of arrest from the government. In one response, Russia enacted a law banning “fake news” and said that calling the war and invasion – or even calling it a war in the first place – is an offence that carries 15 years in prison. Media outlets have, of course, began pulling their journalists from the country as the worry of their safety grew to be too much.
More recently, even more pain is being handed out to Russia. PayPal has shut down its services in the country over Putin’s war on Ukraine. From Reuters:
Payments company PayPal Holdings Inc (PYPL.O) shut down its services early on Saturday in Russia, citing “the current circumstances,” joining many financial and tech companies in suspending operations there after the invasion of Ukraine.
“Under the current circumstances, we are suspending PayPal services in Russia,” President and Chief Executive Dan Schulman said in a statement. He added that the company “stands with the international community in condemning Russia’s violent military aggression in Ukraine.”
A company spokesperson said PayPal will support withdrawals “for a period of time, ensuring that account balances are dispersed in line with applicable laws and regulations.”
PayPal, which had only allowed cross-border transactions by users in Russia, stopped accepting new users in the country on Wednesday.
The move is joined by Via and MasterCard – both of which suspended services in Russia. From the CBC:
MasterCard and Visa are suspending their operations in Russia, the companies said on Saturday, in the latest blow to the country’s financial system after its invasion of Ukraine.
MasterCard said cards issued by Russian banks will no longer be supported by its network and that any card issued outside the country will not work at Russian stores or ATMs.
“We don’t take this decision lightly,” MasterCard said in a statement, adding that it made the move after discussions with customers, partners and governments.
Visa said it’s working with clients and partners in Russia to cease all Visa transactions over the coming days.
“We are compelled to act following Russia’s unprovoked invasion of Ukraine, and the unacceptable events that we have witnessed,” Visa chair and CEO Al Kelly said in a statement.
The twin suspensions were announced within 16 minutes of each other, and they followed a private video call earlier in the day between President Volodymyr Zelensky of Ukraine and U.S. lawmakers.
The moves, to some degree, represents a financial one two punch for Russian’s living in Russia. On the one hand, you have businesses who benefit greatly from the two credit cards suddenly seeing them no longer work. On the other hand, you have a rapidly crashing currency contributing to the tail spinning of the economy.
Some Russian’s, of course, depend on PayPal for their online commercial activities. So, for some, that life line was suddenly cut off, causing those people to scramble to find alternatives that operate outside of the SWIFT system – not an easy task if you want to find something that doesn’t look shady by any means. What’s more is that a lot of online services go through PayPal, Visa, or MasterCard as payment options. With all three cut off, that severely limits who one can do business through.
Obviously, that pails in comparison to Ukrainian’s who are seeing the shelling continue on their cities. To some degree, having your PayPal account shut off sounds like a first world problem compared to having your own home levelled and only having the clothes on your back.
It’s a terrible situation that looks like it’s going to keep getting worse. Some have been questioning the mental health of Putin and the persistence to keep going even when so many oppose this war in the first place. With so many surprises (such as Switzerland abandoning its history of neutrality and coming out against Putin’s efforts and Finland residents suddenly being particularly interested in seeing their country join NATO) at this point, what is going to happen next is anyone’s guess. This especially with so many moving parts involved here.
Drew Wilson on Twitter: @icecube85 and Facebook.
