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Russia's Sberbank re-uses bank card chips to combat shortage

St. Petersburg International Economic Forum (SPIEF)

MOSCOW (Reuters) - Russia's top lender Sberbank on Thursday said it had started removing chips from un-activated bank cards to combat a shortage sparked by European suppliers halting deliveries, as sanctions rain down on 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 the import of advanced technology posing a particular challenge.

The National Card Payment System (NSPK) in April said there were not enough chips to meet demand for issuing Russia's home-grown Mir banking cards as European chip suppliers refused to work with Russian banks. Visa Inc and MasterCard Inc have suspended their operations in Russia.

"A shortage of chips for cards has started in Russia," said Sberbank's head of cyber compliance Olga Maklashina at a payment security conference on Thursday. "We mostly worked with European chip producers...there is now a big problem with logistics from Europe.

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"Plus, Visa and Mastercard left the Russian market so everyone started reissuing and making Mir cards, so increased demand for card issuance appeared."

Maklashina said the scheme had saved one billion roubles ($15.86 million) as 375,000 cards each month remain un-activated.

"Chips became scarce and more expensive. Our colleagues at the issuing centre came up with an almost genius solution - reimplanting bank card chips," Maklashina said. "That is, we started picking out chips from cards and inserting them into new ones."

Maklashina said Sberbank was only taking the chips from un-activated cards.

The NSPK said in April it was turning to Chinese companies for supplies of microprocessors for cards.

($1 = 63.0500 roubles)

(Reporting by Reuters; Editing by Mark Trevelyan)