Visa, MasterCard Better Off Quitting Russia, Morgan Stanley Says
New legislation placing foreign payment service providers under the thumb of Russian regulators is so damaging to Visa and MasterCard that the two U.S. companies might be better off abandoning the Russian market, Kommersant reported Thursday, citing a copy of a report by investment bank Morgan Stanley.
Compliance with the new law will cost Visa and MasterCard at least $2.9 billion, — some five times more than the two companies' combined annual revenue in Russia, Morgan Stanley estimated in a confidential May 6 report titled "The Russian Bear: Impacts on V and MA."
The report studies the impact of amendments to the Russian law on a national payment system, signed by President Vladimir Putin on May 5, which massively increased regulatory control of foreign payment service providers. Visa and MasterCard, which together dominate the Russian payment services market, unceremoniously cut services to two Russian banks in March in response to U.S. sanctions against Russia over its annexation of Ukraine. Within days, Putin was leading the charge to reduce Russia's vulnerability to foreign governments, and the law was fast-tracked through the Russian parliament.
The law will require international payment systems who intend to remain on the Russian market beyond July 1 to place a security deposit in the Central Bank equal to the cumulative value of two days of transactions processed in Russia.
http://www.themoscowtimes.com/business/article/visa-mastercard-better-off-quitting-russia-morgan-stanley-says/500169.html
Its obvious that the issue isn't the $2.9billion deposit which isn't a cost anyway ; its exposure to having to build processing centers in Russia and pay fines of up to 10 percent of the funds held by the Central Bank in the event of a unilateral denial of services aka US sanctions.