Due to Western Sanctions, Sberbank Uses Inactive Used Chips to Issue New Credit Cards

JAKARTA - Russia's largest lending bank, Sberbank, said on Thursday, July 7 that it had started removing chips from deactivated bank cards. This was done to combat supply shortages sparked by European suppliers halting chip shipments, due to sanctions slapping Russia and its banking sector.

Unprecedented Western sanctions over Moscow's actions in Ukraine and supply chain disruptions have severely impacted Russia's access to certain goods, with even the import of advanced technology a challenge for them.

The National Card Payment System (NSPK) in April said there were currently not enough chips to meet Russia's Mir banking card issuance demand because European chip suppliers refused to work with Russian banks. Visa Inc and MasterCard Inc have also suspended their operations in Russia.

"The shortage of chips for cards has started in Russia," Sberbank's head of cyber compliance, Olga Maklashina, said at a payments security conference on Thursday. “We mostly work with European chip manufacturers. But now there is a big problem with logistics from Europe.”

"Plus, Visa and Mastercard left the Russian market so everyone started to reissue and manufacture Mir cards, resulting in increased demand for card issuance," said Maklashina.

Maklashina said the scheme, removing old chips, had saved a billion rubles (IDR 237.3 billion) as 375.000 cards each month remained deactivated.

"Chips are becoming scarcer and more expensive. Our colleagues at the publishing center came up with an almost ingenious solution, namely replanting used bank card chips," said Maklashina. "That is, we started picking chips from old, dormant cards and putting them into new ones."

Maklashina said Sberbank only took chips from cards that were no longer activated. The NSPK said in April that it was turning to a Chinese company to supply microprocessors for the cards. But apparently, it is also not sufficient to meet the high demand in the country.

The impact of western sanctions is increasingly felt for Russia. They must try to get out of this chip crunch as soon as possible or else they will face a huge shortage of chips.