Monobank's refusal to cooperate with Mastercard: how it will affect the bank's customers

Monobank has recently announced that it will cease cooperation with the international payment system Mastercard , whichhas become economically unprofitablefor the Ukrainian financial institution. The bank's customershave been notified of the need to replace their Mastercard cards with Visa cards.

Read RBC-Ukraine's article on what this means for the bank's clients.

Monobank has warned its customers that they will have to change their cards from the new year, as the bank has decided to stop cooperating with Mastercard in favor of Visa. As explained in the bank, this was done in order to save money and not to raise tariffs for customers.

Replacement is required for all Mastercard cards from Monobank, except for premium ones. Holders of Iron and Platinum cards can continue to use them as before. All other users of the bank's services must replace their cards with Visa by the end of 2024.

Replacing a virtual card is easy: you need to go to its settings in the mobile application and click "Reissue". The new card will appear in the application immediately. However, to receive the plastic card, you will have to wait for its delivery by Nova Poshta, which will take several days.

Starting in 2025, Mastercard cards will be disabled and cannot be used to pay in stores or online. However, the bank promises that the funds accumulated on Mastercard will not be lost, but will be automatically transferred to new cards.

(In)convenience for customers

There is almost no difference between Visa and Mastercard in Ukraine, as the fees for both payment systems are almost the same. The only difference is in the procedure for converting currencies abroad. Visa's main currency is the dollar, while Mastercard's is the euro. This will entail additional costs for Visa cardholders in Europe due to double conversion: when making payments with a hryvnia card, the cardholder will first pay a fee for converting the hryvnia into the dollar, and then for converting the dollar into the euro.

It was not possible to find out whether the bank is afraid of an outflow of customers, which at the beginning of the year numbered about 8 million - Monobank did not respond.

According to Oleksandr Karpov, director of the Ukrainian Interbank Association of Payment System Members EMA, the transition from one payment system to another will not affect customers in any way.

"The bank received an offer from one of the payment systems that it could not refuse, and the other system could not offer anything more interesting. There are banks that work with one payment system at all, and this is a common situation in Europe or the world. And they may not accept cards of another system at ATMs or terminals of a certain system. No one can force them to do so. That's why everything is fine, the market is working," explained Karpov.

Dmytro Glinsky, acting executive director of the Independent Association of Banks of Ukraine, also assures that bank customers should not worry if the payment system is changed - nothing will change for them, and they are unlikely to feel any changes.

"Payment systems offer different terms of cooperation to banks, and it is up to the bank to choose which one is more convenient for it to work with. Banks have the right to choose a payment system or work with all of them simultaneously. Customers should not suffer," the source told RBC-Ukraine.

Whether there was a violation of the law

The mere fact of changes in a bank's relations with a particular payment system and offers to customers to replace cards of this system with cards of another is not a violation of the law.

"It should be understood that banks are quite regulated in the provision of services and formalization of relations with clients. When opening an account, the bank and the client enter into an agreement that describes in detail the terms of service, including the issuance of payment instruments (cards), terms, and tariffs," says Dmytro Glinsky.

In Ukraine, the law provides clear requirements for the content of contracts and the procedure for changing the terms of banking services, and the National Bank of Ukraine has an active Financial Services Consumer Protection Department that reviews customer complaints and monitors banks' compliance with the law in servicing customers.

As a rule, comprehensive banking service agreements are quite flexible, which allows for the introduction of new services and products for the bank's customers. At the same time, the terms of such agreements are subject to rather strict requirements to prevent abuse by financial institutions, says Mr. Glinsky.