opinion

The Financial Fallout of Russia-Ukraine War

The Financial Fallout of Russia-Ukraine War

Like many of you, I am deeply saddened by the fighting between Russia and Ukraine. Our modern times give us a front row seat where we can see what’s going on 24 hours a day. It’s both mesmerizing and sickening to see the images of cities being blasted, families being displaced and people killed and injured. It conjures up emotions you don’t even realize you have. It’s hard to believe it’s all real.

Efforts to stop the fighting include some of the most restrictive sanctions ever imposed and the impacts are being felt around the world, especially since so much of the world’s economy is transacted in U.S. dollars. This month we’ll look at the financial and personal impacts on both our industry and our personal lives.

“It’s heartwarming to know that help for impacted industry workers and Ukrainians continues. Adult businesses have come together to raise funds and make a difference.

Adult Industry Aid and Asylum

Like many of you, Segpay has Russian and Ukrainian team members. We also have many clients that have ties to both countries. When this all began, we were at the TES Conference in Sitges, Spain. There were many Ukrainians at the show and when things heated up, they were left with no way to get home. Our colleagues at ImLive stepped up and pitched in to help all 46 delegates.

They put them up in hotels and stayed with them until safe passage was found to neighboring countries. All their accommodations and flights were gifted by individuals and companies in our industry. It’s heartwarming to know that help for impacted industry workers and Ukrainians continues. Adult businesses have come together to raise funds and make a difference. ImLive has expanded its efforts to support a field hospital in Ukraine, and other companies are donating their commissions or part of their income to Ukrainian refugees or developing GoFundMe accounts to help families who fled to Poland to get necessities like food and safe housing. Stripchat has developed a donation payout to help Ukrainian-based performers who can no longer work. The response from the adult community has been inspiring.

Payment Paralysis

Up until February 24 when the war began, we had operated as a unified payments industry. As a payment processor, our system was open to take transactions from anywhere in the world except for a small number of countries targeted for sanctions by the Treasury Department’s Office of Foreign Assets Control: Balkans, Belarus, Burma, Ivory Coast, Cuba, Democratic Republic of the Congo, Iran, Iraq, Liberia, North Korea, Syria and Zimbabwe. Unfortunately, the decision made by Russia to invade Ukraine made a significant impact on our global economy and harmony.

We have seen and felt those impacts in our financial business. Merchants that have Russian directors and ultimate beneficial owners, or UBOs, are being more highly scrutinized. We’ve had to increase our “politically exposed persons” scanning on Russian UBOs and directors daily to make sure we are staying compliant. Many of our merchants and partners had development shops in Ukraine, Russia and Belarus which have now had to go into a holding pattern as their teams try to regroup. Content creators and cam models also had homes in Ukraine, Russia and Belarus, and are having a difficult time getting paid. Ukrainian models are fearing for their lives.

Transaction Troubles

Transactional volumes of our merchants have been impacted too. Shortly after the war began, the U.S. and EU implemented financial sanctions on banks in Russia, which began to impact our Russian transaction volume. Initially we noticed heavier declines by the banks that were sanctioned by the U.S. and EU, but things escalated. On March 6, Visa, Mastercard and American Express announced that they would no longer support transactions for Russian consumers outside of Russia and cards issued outside of the country would no longer work within the Russian Federation. To support updates from the card brands, our team blocked over 2,529 Russian bank identification numbers. Russian traffic represented 3% of our Payfac volume. Segpay was also required to address the Central Bank of Ireland’s concerns regarding Russian sanctions due to our base of operations there; to keep things running smoothly, we had to verify that we had no financial concerns or implications from outsourcing payment processing to Russia. We also had to provide a detailed overview of our cybersecurity.

I used to wake up every morning and check the Segpay sales for the day. Now that is the second thing I look at. What I really want to see is that there has been a ceasefire and that peace will quickly return to the region. I pray it happens soon so we can put our world back together, restore our global economy and work in harmony again.

Cathy Beardsley is president and CEO of Segpay, a merchant services provider offering a wide range of custom financial solutions including payment facilitator, direct merchant accounts and secure gateway services. Under her direction, Segpay has become one of four companies approved by Visa to operate as a high-risk internet payment services provider. Segpay offers secure turnkey solutions to accept online payments, with a guarantee that funds are kept safe and protected with its proprietary Fraud Mitigation System and customer service and support. For any questions or help, contact sales@segpay.com or compliance@segpay.com.

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