Since the start of the Ukraine War, a barrage of western sanctions has crippled the Russian economy and wreaked havoc on its financial system.
The country has been largely cut off from the international payment system SWIFT, seen its access to $630 billion in foreign exchange reserves restricted, and watched as more than $17 billion in assets were seized from Russian oligarchs.
But for the past eight years, Russia has been preparing for the worst.
In June of 2014, just three months after its invasion of the Crimean Peninsula, the country established its own payment system to help process credit card transactions domestically. Russia’s National Payment Card System—known to Russians as NSPK—has continued to process credit card transactions during the latest fighting in Ukraine.
Even though Mastercard, Visa, American Express, PayPal, and Discover have all suspended their operations in Russia, its citizens aren’t experiencing the type of disruption many might expect.
Mastercard told Fortune via email that credit cards issued by Russian banks are no longer supported by its network. Instead, credit cards being used in Russia are now processed over something called a “switch,” run by the Central Bank of Russia.
Dr. Leo Lipis, the CEO of the payments industry consulting firm Lipis Advisors, said that a switch is “a hub for communication that connects the various banks involved in a payments network.”
This means Russian consumers relying on locally-issued cards bearing the Mastercard logo can still use their cards like they normally would, Lipis noted.
A spokesperson for Mastercard confirmed in a separate email to Fortune that the company doesn’t have the ability to block domestic transactions in Russia, but it receives “no benefit” from them. This is because Mastercard, along with other Western companies, signed an agreement for their transactions to be processed by NSPK in 2015.
Russians are still blocked from using Western credit cards outside of the…
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