There's an almost endless list of reasons for payment companies to avoid doing business in Russia, but the opportunities are just as vast.

Regulatory hurdles, economic volatility, adversarial politics and the risk of military action in neighboring Ukraine have all presented challenges for global companies in recent months. Any company that can endure these challenges stands to benefit greatly.

"Though the country may never be easy to operate in, the potential of the country will always outweigh the perspective consequences, making a return to the Russian market inevitable for the industry," said Tristan Hugo-Webb, a London-based associate director of the global payment advisory service at Mercator.

Russia's military activity near the Ukrainian border has continued into 2015 while Western leaders work to bring a diplomatic end to the crisis. The dispute has led to sanctions which have weakened Russia's economy.

"The tense diplomatic push between the West, Russia and Ukraine reveals a noticeably somber outlook for Russia and western relations and business activity," said Javier Paz, a senior analyst at Aite Group, adding there are financial strains for local banks, as well as inflation, store closings and shifting demands for goods and services.

Russia has responded to the sanctions by implementing laws restricting the operations of Western companies such as Visa and MasterCard, as well as forming a nationalized payment system similar to China's UnionPay.

That national payment system is springing to life. A group of five Russian banks began processing MasterCard payments via the new system this month, and the transfer of international payment cards to the country's national payment system will be completed by March 31, according to the Russian central bank's press agency.

Russia also started its own electronic transfer alternative to SWIFT in December, out of concerns the European Union would remove Russia from the global SWIFT system, a move Russian politicians have said would be tantamount to war.

The card networks face economic exposure to the new Russian payment system, though the amount is still uncertain. Visa is expected to lose as much as $70 million in the transition to Russia's central system; while MasterCard's predictions have been less dire. MasterCard gets about 2% of its revenue from Russia, while Visa receives about 4%.

During Visa's most recent earnings calls, Bryan Pollitt, Visa's CFO, said the "severe economic challenges in Russia have been a notable drag on cross-border results" and added the company's revenue growth in cross-border activity for the year would soften by 0.5%.

Charles Scharf, Visa's CEO, said the company was working with Russia's central bank and the national payment card system to transition to the local network. Visa and MasterCard did not return requests for comment for this article.

"The majority of the card networks revenues come from the processing. They make very little out of the actual transactions…the banks make that money," said George White, president of Profit Insight, a firm that advises other companies that do business in various parts of the world, including Russia and Ukraine.

The Russian payment system will need to find partners to help it mature, but that prospect is more of a threat to Visa and MasterCard than an opportunity, White said.  "Visa and MasterCard aren't the flavor of the month right now in Russia."

Other Western payment companies do business in Russia, including Western Union and American Express. Russian payment companies also sell to clients outside of the country. There's enough cross-border activity to attract the attention of standards groups such as the Payment Card Industry Security Standards Council.

Companies in Russia and Ukraine are reporting operational challenges because of the crisis. Currency reductions have decimated budgets, White said, noting there is some strength since travelers are still visiting Moscow and spending money, and there is some pressure to end sanctions, which would improve the market for payment companies.

But Russia was not an easy place to do business, even before the crisis.

Russians have long been suspicious of American companies, said Zil Bareisis, a senior analyst at Celent, and country's threat to form a national payments scheme goes back more than a decade.

There is still faith in the country's long-term potential for payment companies, despite the rough history and ongoing challenges. Russia has more than 150 million debit cards in circulation, and its low volume of electronic payments presents an opportunity to shift its economy further away from cash. But any efforts made by Western companies to strengthen their position in Russia will take a long time to pay off.

"Russia has never been an easy place to operate for outside players and the current situation is only further worsening the business environment. Compounding this is the fact that these undesirable conditions are set to continue for the foreseeable future as I don't predict a regime change in the near future," Hugo-Webb said.

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