* Local partner could help MasterCard bypass new rules
* Visa says Russia's planned security deposit won't work
* Rule changes part of plan for national payment system
* Russia a small mkt for MasterCard, Visa but offers growth
By Alexander Winning and Oksana Kobzeva
MOSCOW, June 17 MasterCard Inc said on
Tuesday it was seeking a Russian partner to process payments
made within the country, a move that could help it bypass new
rules imposed on foreign card companies in the wake of Western
sanctions over the Ukraine crisis.
Its main competitor, Visa Inc, meanwhile, reiterated
its position that the obligation to pay a hefty security deposit
to the central bank - the most onerous of the new requirements -
Both companies considered quitting Russia after President
Vladimir Putin signed the rules into law in early May but said
they would stay after officials showed a willingness to relax
The Russian finance ministry, the central bank and local
bankers have criticised the law, which was passed after Visa and
MasterCard stopped serving several Russian banks targeted by
recent Western sanctions and forms part of a plan to develop a
national payment system to reduce Russia's reliance on the West.
Mastercard said on Tuesday it had launched a tender to find
a partner to perform clearing, authorisation and settlement
services for its Russian operations and that the partner should
have a processing centre within Russia - another of the new
"We share the goal of the Russian government to decrease the
volume of cash turnover in favour of electronic transactions,"
Ilya Ryaby, director of MasterCard in Russia, said in a
Visa welcomed a move to delay until October the obligation
to pay quarterly security deposits of 25 percent of a card
company's average daily turnover in Russia to the central bank
but said the requirement was still "unworkable and goes beyond
what we are willing to do."
Morgan Stanley analysts estimated in a report in May that
Visa and Mastercard would be required to post around $1.9
billion and $1 billion in collateral, respectively, once the
rules take effect.
They said the overall earnings impact would be limited if
they were to leave Russia, given that the country accounts for
less than 4 percent of both companies' revenues globally.
Amendments to the deposit rules are due to be discussed in
Russia's lower house of parliament later this week, and analysts
expect a compromise solution to be reached.
Between them, Visa and MasterCard account for over 90
percent of the credit and debit cards issued in Russia, meaning
that their exit would seriously complicate the lives of many
Although in terms of revenues Russia remains a minor market
for both companies, the country's credit card system is
developing fast and its 140 million population could offer
greater growth potential than developed countries.
Deputy Finance Minister Alexei Moiseev told Reuters the law
would likely be amended so the government would be able to waive
the requirement to demand security deposits from international
card companies if certain conditions were met.
"The work of international (payment) systems through a
Russian services provider provides the notion of uninterrupted
services and could fall under a rule to cancel the security
deposit," Moiseev said.
A spokesman for Visa declined comment on whether the company
also planned to find a Russian partner to comply with the new
rules. The central bank, which is still interpreting how the
rules will be implemented, also declined comment.
(Reporting by Alexander Winning and Oksana Kobzeva; Editing by
Megan Davies and Susan Fenton)