Russia is very much on the minds of Visa executives as they wait to see what effect the ongoing political standoff with the U.S. over the situation in Ukraine will mean for payments in Eastern Europe.

The U.S. has established economic sanctions against Russia, requiring Visa to block transactions from two Russian banks, Visa CEO Charlie Scharf told analysts during the company's second-quarter earnings conference call on April 24.

The card network meanwhile plans to expand its payment processing in Japan, having acquired 100% of the country's GP Network Corp. Total System Services Inc. sold its majority share of the network to Visa and sold its TSYS Japan business unit to payments processing executives who worked for TSYS Japan.

GP Network Corp. provides front-end data capture and network services for credit card transactions in Japan. The company handles maintenance and administration of stored data in merchant terminals and support services.

In the U.S., Visa continues its push for industry collaboration on security and the EMV migration. The company plans to roll out tokenization services with issuing, processing and acquiring partners over the next year, Scharf said.

In addition, Visa is lowering or eliminating many of its merchant acquirer fees for merchants who generate less than $15,000 in annual gross Visa sales.  Visa also plans to eliminate up to half of its operating rules, Scharf added.

In Russia, the scales could tip in either direction. The banks affected by sanctions represent only 1% of Visa's volume in Russia, and the card brand will comply with U.S. law if more banks are involved in sanctions, Scharf said. In the meantime, Visa continues to serve all other clients in that region.

"If you get down to reality for a second, we have 100 million cards in Russia today and it is not in anyone's best interest, inclusive of the Russians, to make those cards not available to their own citizens," Scharf said.

However, Russian president Vladimir Putin claims Visa and the other U.S. card brands are undermining trust in Russia by complying with the U.S. sanctions, and will suffer as a consequence.

Russian leaders are contemplating a series of changes that would be problematic for Visa "as early as tomorrow," Scharf said.

Those changes could affect all domestic data processing taking place in Russia and most of the transaction data residing in Russia. In addition, Russians are working to create a settlement center 100% owned by the Central Bank of Russia.

Russia also seeks a collateral requirement for foreign payment systems and the ability to impose fines on foreign payment system providers, Scharf said.

"None of this is helpful for Visa, and parts might even cause us to rethink our domestic processing opportunity in Russia," Scharf added. "But we remain hopeful that there is still opportunity for Visa to participate in the growing electronic payments business in Russia."

Visa has already contemplated what might occur if Russia implements its long-discussed national payment system, which would make it difficult for major card brands to compete.

Visa reported net income for the second quarter ending March 31 at $1.6 billion, an increase of 26% over the prior year.

Net operating revenue in the fiscal second quarter of 2014 was $3.2 billion, an increase of 7% nominally or 9% on a constant dollar basis over the prior year. Visa said service, data processing and international transaction revenues spurred the growth.

Total operating expenses were $1.1 billion for the quarter, a 2% increase over the prior year, primarily due to an increase in marketing spend to support the 2014 Sochi Winter Olympics and 2014 World Cup campaigns. These were offset by a reduction in personnel and professional fees.

Visa's U.S. debit revenue rose 6.4% to $408 billion, while U.S. credit revenue jumped 10.2% to $281 billion from a year earlier.

International debit rose 6.4% to $574 billion, while international credit rose 4.9% to $463 billion from a year earlier.

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