Payment giants Mastercard, Visa, and PayPal set to miss out on combined £1.8bn due to Ukraine war
- Mastercard made $755m revenue from Russia and $378m from Ukraine in 2021
- Visa had exposure of approximately $964m in Russia and $241m in Ukraine
- Russia and Ukraine only account for 0.5% of revenues for Paypal, or $127m
Payment giants Mastercard, Visa and PayPal are set to miss out on a combined $2.4billion (£1.8billion) in revenues due to the ongoing war in Ukraine, new analysis suggests.
At the start of March, Visa and Mastercard cut off transactions in Russia, meaning that their cards issued in the country would no longer work abroad, as well as foreign-issued cards in Russia.
However, consumers are still be able to use Mastercard- and Visa-branded cards for domestic transactions in Russia, at least until they expire, Russia’s country’s state-backed payments network confirmed last month.
Revenue hit: Visa and Mastercard have cut off transactions in Russia since the start of March
In 2021, Mastercard generated around $755million in revenue from Russia and $378million from Ukraine, according to Murthy Grandhi, a banking analyst at analytics company GlobalData.
The US payment giant said last month that Russia and Ukraine were ‘important contributors’ to the company’s overall net revenues and that it was monitoring a possible hit to its balance sheet.
In 2021, about 4 per cent and 2 per cent of Mastercard’s net revenues were derived from Russia and Ukraine, respectively.
‘Given the rapidly changing developments in these markets, we continue to monitor and assess the impact of current and potential future actions of governments and others on our operations, including potential balance sheet and settlement-related exposure,’ Mastercard said in March.
Meanwhile, Grandhi said Visa had exposure of approximately $964million in Russia and $241million in Ukraine, which accounted for roughly 4 per cent and 1 per cent of its total revenue, respectively.
Another US payment giant, Paypal, also shut down its Russian services at the start of March, while also blocking e-wallets of clients in the country later in the month.
At the time, it said it would allow withdrawals ‘for a period of time, ensuring that account balances are dispersed in line with applicable laws and regulations’.
PayPal had already exited from domestic services in Russia in 2020, only allowing cross-border money transfers by users in Russia at the time.
But Russia contributed just a small slice of business for PayPal, which derived only 0.5 per cent of its revenue from the country and Ukraine, which amounts to approximately $127million, according to GlobalData.
Grandhi added: ‘Discover, another major US payment industry player, has also suspended plans to enter the Russian payment market.
‘It was in the process of registering itself as a foreign payment system operator with the Russian Central bank and establishing a branch office in the country.’
Meanwhile, some Russian banks have been barred from the Swift international payments system.
Grandhi said: ‘Although the ban from Swift will not completely prevent Russian banks from making cross-border transactions with international partners, it makes the complete process more expensive, challenging and less secure.’
Visa and PayPal have been approached for comment.