• WSJ article about Russias payment system is about seven years too late.
• The Russian government built Mir after the Crimea sanctions.
• Visa and Mastercard businesses may never return to Russia.

The Flair

It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a dismal science. But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.

The Quiet

The domestic-payments system continued to work smoothly after Visa Inc. and Mastercard Inc. pulled out earlier this month. While the card giants exit from Russia was viewed as a significant move by many in the West, the reality on the ground was anything but. Most Russian consumers never lost the ability to use their Mastercard- and Visa-branded cards to pay for things within the country.

There were roughly 197 million Mastercard or Visa cards in Russia at the end of 2020, according to the Nilson Report, a trade publication. But behind the scenes, the cards dont rely on the U.S. networks systems to process payments in Russia. For years, they have used a homegrown system overseen by Russias central bank.

The National Payment Card Systemknown by its Russian initials NSPKruns the financial plumbing that underpins card transactions in Russia, even for cards bearing Visa and Mastercard logos.

The system was part of Moscows eight-year effort to insulate the Russian economy from Western financial pressure. The Kremlin also has aggressively promoted Russias own card company, called Mir, which is built on NSPKs infrastructure. More than 100 million Mir cards have been issued since its launch in 2015, according to Mirs website.

Instead of sanctions hurting Russia, the Russian government had already solved this potential internal processing problem.

With Russian banks partnering with UnionPay will take care of international charges, the entire issue is solved.

So the result of all this?

1. New Mir cards are ordered once a Russians Visa or Mastercard expires (or before).
2. New UnionPay cards get ordered if Russians travel abroad.
3. Truckloads of lost business for Visa and Mastercard.

Joke Biden squarely took aim at Russia, but shot American business in the foot.

Mastercard had said at the time, ... that it will restore operations in the country when it is appropriate, and if it's permissible under the law.

Yeah, good luck with that.

The (Missing) Honesty

As a Texan might say, the USG is all hat and no cattle.

By foisting useless sanctions and military backing - without using the US military, I hasten to add - the USG has given the world the false impression that its willing to fight for Ukraine.

The worlds woke sheeple bought that story hook, line, and sinker, with the help of a complicit media industrial complex.

But the USGs actions have shown the opposite - that the US would like to stop Russia, but it wont risk its troops doing so.

Its far happier to throw US companies under the bus to see if prohibiting their services in Russia will work to stop Putins incursion.

It sure doesnt look like it will

Wrap Up

When will Visa and Mastercard shareholders sue the US government?

As ridiculous as that may seem, why not take a shot at recovering some of their losses?

Perhaps theyll go after their board, who allegedly knew this was a stupid move and would just push all the Mastercard/Visa transactions into Mir.

What will be the knock out effects in the years to come for US financial companies?

Do they really think every government in the world will continue to welcome them?

Perhaps theyll turn to Russias Mir system instead.

Hey, we know what its like to be shut out of the world financial markets. So you can rest assured well never do that to you.

Its a hell of a sales pitch, isnt it?

With all the Russian tech expertise out there, its not far fetched.

Theres still time for US companies to pull back from the abyss.

They should do it immediately, with the medias encouragement.

But the media has to break with the government, and theres really no sign of that happening.

Yet.

Until tomorrow.

All the best,

Sean