An impressive hit on global image of MasterCard and Visa was initiated by Obama administration in an attempt to simulate sanctions against Russia in a response to Ukraine crisis. On a highly competitive market and with Bitcoin knocking at the door, it is a form of madness to use the control of credit card operators for achieving political goals.
USA is administering formally some of the major global business systems including credit cards and Internet domain name system. It can easily initiate a chaos by using this power. But nothing more. Even up to now there were ideas of creating a non-USA competition. The BRICS countries are thinking on their own SWIFT equivalent. And in Internet there is always an alternative to ICANN’s DNS infrastructure. Everyone can use it, by simply entering the relevant domain name servers in DNS properties of used Internet connection. The only reason this not happening on a large scale is that up to now it was easier to use the established systems that had no any limits.
Stopping Visa and MasterCard services for some Russian banks is an attempt to crush the business of these companies in Russia. It will not be surprised if in next days we see a decline in shares prices on the stock exchange. Russia is 8th world economy with 140 million people. It is an impressive market that will attract many candidates for establishing an alternative payment system. In addition, Russia is still an economy with dominating cash payments, so credit and debit cards are not crucial for the commercial turnover. In fact, credit cards are needed mostly for Internet transactions and when travelling abroad. But even in this case Russians can open accounts abroad and get cards.
But the most absurd part of these sanctions is that they are addressing the common people and not Russian elite. The people that have power to invade Crimea, have also accounts and hidden companies abroad. In fact they even own banks abroad. The “London City” is called Moscow on Thames. So the sanctions are nothing than making a small irritating troubles issue for common people.
The socialist government in White House may be has forbidden what the term “common people” means. It means also “customers”. And means also a “mid-class”. Having good business means having the thrust and confidence of the “common people”. In business it is well known that confidence is slow and difficult to get and very easy to lose. So trying to hit Putin, now Obama is hitting the consumer confidence in Visa and MasterCard.
And generally, it is ridiculous to shatter the institutions of so called “old financial order” at a time a dangerous competitor is appearing and growing. The Bitcoin idea threatens to make not only credit cards, but also most of the banks, unnecessary. In fact it threatens even the currencies and the dollar itself. In this situation to make rapid moves and experiments in financial system, is to say the least foolish.
With years of printing (clicking) dollars and making angry the rest of the world, the financial weapons are the last that could be used by USA for any reason. This looks as a “Russian roulette” policy…
March 21st 2014