Western Union opts out of money transfers in Russia
US financial services multinational Western Union will stop money transfers within Russia from April 1. The company announced its decision in a letter sent to partner banks, business newspaper RBC reported on Monday. Western Union said it cannot compete with Russia’s domestic Faster Payment System (FPS) and card transfers from the largest Russian banks, adding that cross-border transactions will still be performed.
“The company is focusing on the development of the traditionally demanded service of international money transfers, and continues to develop a multi-channel platform that allows Western Union partners (banks) to launch transfers abroad for their clients quickly and in compliance with all regulatory requirements,” a company representative told RBC. He refused to disclose data on the volume of internal transfers within the country.
According to the letter, users won’t be able to transfer money within Russia via Western Union from March 31. And then, starting April 1, they won’t be able to receive a payment or get a refund. Those who made a transfer prior to March 31 which was not received by the addressee will be able to get a refund at Russian Post Offices. Also, from March 24, the limit of internal transfers will be reduced to 5,000 rubles (around $66). Domestic transfers currently range from $661 to $7,546 per day.
Western Union is one of the largest players in the cross-border money transfer market. The American company has a legal entity in Russia and is included in the register of the country’s payment system operators. According to data from the Russian central bank, during the first 11 months of 2021 individuals transferred $7.8 billion from Russia via various money transfer systems, including Western Union.
The market for domestic transfers in Russia is dominated by banks, in particular Sberbank. Data shows that in the first nine months of 2021, a total of 8.5 billion transfers worth 42.5 trillion rubles ($562 billion) were made in the country. Banks traditionally set zero commissions for card-to-card transfers within a credit institution, and the Russian FPS, which was launched in 2019, allows people to make such transfers between different banks by phone number without any commission (for amounts up to $1,323 per month). Meanwhile, Western Union takes fees for transfers to bank units and for international transactions. It does not charge commission for transferring to a card or bank account, though.
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