Russia builds alternative payment system as sanctions lose effectiveness

Between half and 80% of Russia’s cross-border settlements now move through “alternative channels” rather than traditional banking infrastructure. The shift reflects Moscow’s effort to keep trade moving despite Western sanctions and exclusion from the SWIFT system.

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The geography of Russia’s foreign trade has changed radically over the past few years. While in 2021 the share of Asian and Pacific countries in Russia’s foreign trade was about 43%, it now reaches 78%.

Promsvyazbank, a state-owned bank under sanctions, created the A7 platform in 2024. The payment agent was designed to support transactions without SWIFT and has continued expanding internationally, according to its chairman and co-owner, Moldovan businessman Ilan Shor.

Russia has also redirected much of its foreign trade toward Asia. Igor Gorin, A7’s deputy director, said the share of Asian and Pacific countries in Russian foreign trade had risen from about 43% in 2021 to 78%. China has replaced the European Union as Russia’s main trading partner since Russia’s invasion of Ukraine in 2022 and the imposition of Western sanctions.

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Today, about 99% of settlements with China are already conducted in national currencies.

Gorin said about 99% of settlements between Russia and China now take place in national currencies. He described trade with India as more complicated because of the imbalance between exports and imports. Indian payments for Russian oil can accumulate in rupees that cannot easily be converted internationally, leaving Russian companies with large holdings they struggle to use.

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Unfortunately, we have a large imbalance in exports and imports with India. This complicates the issue of clearing rupees, which many Russian exporters and importers have encountered.

Iwan Nosov, head of Sberbank’s Indian branch, said the necessary payment infrastructure between the two countries had been built and that there were no current payment problems. VTB chief Andrei Kostin said Russia and its partners had learned to settle transactions despite sanctions pressure. He acknowledged that China was easier because trade was more balanced, while dealings with India remained a process of adjustment. Gorin said settlements in the currencies of friendly countries could create exchange-rate fluctuations, but the market was adapting quickly.

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With China it is easier because we have fairly balanced trade; with India it is somewhat more difficult, but we are still learning.