Demand for cards of CIS banks has grown sharply after the departure of Visa and Mastercard

In April-June 2022, in countries neighboring Russia, the number of cards in circulation increased more than a year earlier. At this time, the peak of Russian card tourism came after Visa and Mastercard left the market in March,

The pace of issuing bank cards in neighboring countries accelerated in the second quarter compared to the same period last year, follows from the data of the central banks of neighboring countries, which RBC studied.

For example, in Kyrgyzstan, Uzbekistan and Belarus, the annual growth was the highest since at least 2018. Double-digit growth rates are recorded in Armenia and Tajikistan (data for May, since statistics for the second quarter were not yet published at the time of writing). Issues are accelerating against the backdrop of the departure of Visa and Mastercard from Russia - their cards, issued by domestic banks, have ceased to work abroad. This leads to the flourishing of the "card tourism" of Russians, experts state - not everyone is satisfied with the domestic Mir system and the Chinese UnionPay, whose cards are expensive and are not accepted everywhere.

Evaluation details

Although part of the increase in the number of cards in circulation in the second quarter may be due to the cumulative effect (issues throughout the year, and not just after the start of the military operation in Ukraine and the withdrawal of Visa and Mastercard), the statistics show an acceleration anyway. Issues in Kyrgyzstan, Uzbekistan, Armenia, Kazakhstan, Tajikistan are also growing in quarterly terms (when the end of the second quarter is compared with the end of the first) - even though “card tourism” began in March. And the rate of this growth is higher than, for example, with similar calculations a year ago.

Central banks do not disclose the number of hole cards - as a result, this aspect is not taken into account in the calculations.

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How banks in neighboring countries increased the issuance of cards

The largest increase in the second quarter was recorded by the Central Bank of Kyrgyzstan: the number of cards of international payment systems for the year increased by 39.7% compared to the same period last year - up to 1.2 million cards. As of July 1, 2021, the number of cards in circulation, on the contrary, decreased by 5.6% in annual terms. The statistics include Visa, Mastercard, UnionPay cards and cards of the Russian Zolotaya Korona system. Banks of Uzbekistan increased the number of cards by 26.2% over the year, up to 29.9 million cards. The local regulator does not single out cards of international payment systems in statistics. According to the results of the second quarter of 2021, this indicator grew by only 1.9%. In the pandemic second quarter of 2020, when the popularity of cashless payments grew worldwide, by 23.5%. In Armenia, the number of Visa and Mastercard cards increased by 16.2% over the period under review and exceeded 2 million. For comparison: in the second quarter of 2021, this figure increased by 5.11%. Belarusian banks increased the number of cards by 11.52% to 17 million. In the second quarter of 2021, the number of cards decreased by 1.03%, in the second quarter of 2020 it grew by only 0.9%. According to the results of May 2022 (data for June are not yet available), banks of Tajikistan issued more than 4 million cards (+28% for the year). A year earlier, the increase was 21%.

However, this trend is not observed everywhere.

According to the Central Bank of Kazakhstan, the number of Visa and Mastercard cards increased by 7.86% over the year, to 39.8 million, but this is the minimum growth rate in recent years. In Georgia, the number of cards in circulation in June 2022 decreased by 0.75% over the year, although in 2021 the decrease was even stronger (minus 2.21%).

Opening cards for Russians could be one of the reasons for accelerating growth, says Yegor Krivosheya, head of research at the Skolkovo-NES center, although this phenomenon also has local reasons: the development of a cashless economy and changes in consumer behavior in a number of countries.

In his opinion, Belarus, Uzbekistan, Kazakhstan and a number of other neighboring countries were the most popular destinations for Russians. According to Elena Peterson, director of the forensic department at Kept (formerly KPMG in Russia), card tourism peaked in April-May, when many banks in Kazakhstan and Uzbekistan advertised services for the prompt opening of accounts for non-residents. Krivosheya believes that the peak was in May and June, also due to the long weekend.

How willingly banks open cards to Russians

RBC sent inquiries to the central banks of neighboring countries and received responses from three regulators. The National Bank of Kyrgyzstan reported that it recommended commercial banks to strengthen internal control when servicing clients, including taking into account the "current economic and geopolitical situation." According to the representative of the Central Bank of Kazakhstan, the opening of bank accounts is carried out only after the banks have carried out all the necessary checks, established and confirmed the identity of the client, checked his presence in the sanctions lists and the list of the Financial Monitoring Agency of the Republic of Kazakhstan.

After the publication of the material, the Central Bank of Armenia told RBC that a large influx of non-residents into the country influenced the growth in the issue of cards, but the regulator does not keep statistics on the circulation of cards by the citizenship of the owners. Banks independently determine the procedure for opening accounts and issuing cards, there is no single approach to this issue, he added: “At the same time, the Central Bank of the Republic of Armenia did not record systemic changes or complications in the process of opening accounts or issuing bank cards.”

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Countries popular with Russians have worsened the conditions for opening cards in their banks, Peterson states. For example, in Kazakhstan, a Russian resident must first obtain a local IIN (registration number). Previously, this could be done through an analogue of "public services" in one or two days. Further, if you had an IIN, you had to buy a local SIM card and go to the bank with this package of documents. But at the end of May, the authorities of Kazakhstan announced a temporary suspension of issuing IINs to non-residents online.

The popularity of Armenia and Georgia for card tourism has fallen, says Kira Vinokurova, special adviser on sanctions issues at Pen & Paper. Many Russians have encountered difficulties in these countries, for example, with artificial delays in the process.

“Now the demand has decreased for several reasons. First, not all banks are ready to open accounts for Russian citizens because of the risk of secondary sanctions. Secondly, such client behavior is usually characterized by a bright surge and attenuation, ”says Krivosheya.

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What are the risks of foreign cards

There are no guarantees that even after opening an account with a foreign bank, new packages of sanctions will not be introduced, due to which all ways to circumvent card restrictions will be closed, Vinokurova warns.

According to Peterson, the main risk is credit, as a person entrusts money to an unknown foreign financial organization: “The principles of customer orientation, as well as protecting the interests of foreign banking clients in each country are different and unpredictable from the point of view of local regulation.” In addition, Russians who moved abroad and opened bank accounts there began to be fined, recalls Peterson. As Kommersant wrote, the problems affected those who notified the Russian Federal Tax Service of the opening of accounts and then made currency transfers with other residents of Russia.

The main risks with opening a card in a foreign bank are related to the fact that the client transfers all data to a third party if he uses remote card opening through intermediaries, Krivosheya believes: “The package of documents may additionally contain powers of attorney, which opens up even more loopholes for scammers.” Hidden risks are associated with the fact that when opening a card abroad, it may require personal presence to service or close it, which is fraught with additional costs, he adds.