Financial sanctions the US might impose on Venezuela could restrict Visa and Mastercard from processing transactions there:
This is an excerpt from a story delivered exclusively to Business Insider Intelligence Payments Briefing subscribers. To receive the full story plus other insights each morning,Financial sanctions that the US might impose on Venezuela could restrict Visa and Mastercard from processing transactions in the country, according to
, citing a senior Trump administration official. These sanctions might also affect The Society for Worldwide Interbank Financial Telecommunication , which global banks and large companies use to send transaction-related messages.The sanctions would target the elite and those loyal to Venezuelan President Nicolas Maduro and would not impact ordinary citizens; the US would target restrictions to exempt transactions to buy food and medicine.
These sanctions could negatively affect Mastercard and Visa's volume, but might also have implications on digital payments in the region amid a cash shortage. Visa and Mastercard could lose out on major volume considering they account for most of the transactions in Venezuela. Most local financial institutions in Venezuela are state-owned, and US and other multinational firms partner with these local financial institutions to process transactions. Restricting this could cut off a source of volume for Mastercard and Visa, and it could influence other international payment processing companies to cease operations in the country also.
Meanwhile, the sanctions could have implications on the momentum that was building around digital payments in the country. Venezuela was seeing ain digital payments in the last few years amid the country's currency crisis, in which cash access was limited due to a combination of slowing currency production and hyperinflation: Cash grew just 14%, while prices increased 2,500%.
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