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. Last Updated: 07/27/2016

Dispute Could Hit Amex Card Users

The American Express credit card, a favorite among the international elite, will be rejected at thousands of locations throughout Russia as of Aug. 7, after Russky Standart bank reached a stalemate with the country's leading processor.

United Card Services, or UCS, announced Thursday that it was pulling out of talks with Russky Standart, which recently secured exclusive rights to handle processing for Amex in Russia.

"To our regret, the renewed negotiations [with Russky Standart] did not come to an agreement," UCS general director Vladimir Komlev said in an e-mailed statement.

The main reason, he said, was that the bank's "financial conditions" were "unacceptable" to UCS.

UCS controls about half the Russian market for credit card processing, experts said.

According to its web site, it processed $2.7 billion last year for 52,000 merchants and 28,000 terminals, and 13 percent of its transactions are of Amex cards.

In April, American Express signed a deal to give Russky Standart exclusive rights to issue and process its credit cards in Russia, and the rights went into effect June 1. Since then, all credit card processors who accept Amex must go through Russky Standart.

"UCS requested conditions that would limit our ability to expand Amex's business in Russia," Russky Standart spokesman Preston Mendenhall said by telephone from New York.

With 20 other banks, Russky Standart has managed to reach agreements on behalf of Amex, including with MDM Bank, Raiffeisen, and Bank of St. Petersburg, all of which will be able to process Amex at their branches.

"At the same time [Russky Standart] has been installing new terminals, more than 1,000 a week," to prepare for next Tuesday, when UCS will stop processing Amex at its terminals, Mendenhall said.

American Express spokesman Tom Sclafani put on a brave face Thursday.

Russky Standart is already making "great progress in replacing UCS terminals with their own terminals to prevent any disruption to Amex customers. So we don't expect any significant long-term impact on our business," Sclafani said by telephone from London.

The news would not make Amex reconsider the exclusivity of its partnership with Russky Standart, he added.