ST PETERSBURG/MOSCOW (Reuters) - The world’s two largest credit and debit card companies Visa Inc (V.N) and Mastercard Inc (MA.N) pledged on Friday to stay in Russia after officials showed a willingness to relax laws that hinder their operations in the country.
Russia’s parliament in April introduced legislation demanding the credit companies make a hefty security deposit to the central bank, a response to sanctions imposed on Moscow over its involvement in Ukraine.
The Russian finance ministry, the central bank and local bankers have described the law as excessive and on Friday a meeting between government officials and the companies’ executives produced promises that both companies will stay.
“We are willing to work in Russia and after this meeting we hope that a compromise solution will be found,” Andrew Torre, director of Visa in Russia, told reporters on the sidelines of the St Petersburg International Economic Forum.
Ilya Ryaby, general director of Mastercard in Russia, said his company would stay in Russia but that “the decision (on whether to relax the rules) depends first of all on the agreement of the president of the Russian Federation.”
Amendments to the law, relaxing the requirements, will be prepared next week, Kremlin’s top economic aide Andrei Belousov told Russian news agencies.
“We will introduce changes to the legislation, we’re looking at different options now,” Belousov was cited as saying.
The rules, set to come into force on July 1, oblige foreign card companies to pay a security deposit of 25 percent of their average daily turnover in Russia to the central bank once a quarter.
Finance Minister Anton Siluanov told reporters that Visa and Mastercard had proposed creating their own Russia-based payment systems but that these plans would take around a year and a half to develop. In the meantime they would work with Russia’s existing payment systems, he said.
“We are willing to cooperate in this direction,” Siluanov said. “I think we will find a solution that suits both Visa and Mastercard and the Russian Federation.”
Visa and Mastercard stopped serving several Russian banks after the United States imposed sanctions over the annexation of Crimea in March, prompting criticism from President Vladimir Putin.
Russia later launched a package of measures aimed at stimulating the creation of a Russian national payment system and reducing its reliance on Western companies.
Visa and Mastercard launching their own Russia-based payment systems would significantly strengthen the government’s initiative to create the national payment system, said Mikhail Kuzmin, an analyst at Investcafe in Moscow.
“Without Visa or Mastercard, it wouldn’t be possible for the government to do anything quickly,” he said, adding that the most likely solution would be for three separate Russian systems owned by Visa, Mastercard and the central bank to co-exist.
Although in terms of revenues, Russia remains a minor market for both companies, the country’s credit card system is developing and its 140 million population could offer greater potential for growth than developed countries.
Business in Russia accounts for just over 2 percent of Mastercard’s total net revenue, and the company said the sanctions had little impact on its first-quarter results. Visa, which has some 100 million cards in Russia, said in April U.S. sanctions were hurting its transaction volumes.
“It’s not in anyone’s interest for either Visa or Mastercard to leave,” Kuzmin said. “For the companies, Russia is a fast-growing market, and for the authorities over 90 percent of Russian cards now use Visa and Mastercard systems.”
Writing by ALexander Winning; Editing by Lidia Kelly and Keiron Henderson