Economy

Russia’s Mir payment cards compete with Visa and MasterCard

Russia will accelerate work on reducing dependence on U.S. payment systems and the dollar as a settling money, RIA news agency mentioned Deputy Foreign Minister Sergei Ryabkov as saying on Monday.

It’s a reaction to the new sanctions against Russia reluctantly signed into law last week by U.S. President Donald Trump. The sanctions targeted Russia’s energy industry, with new limitations on U.S. investment in Russian companies.

“We will obviously intensify work associated with import substitution, reduction of dependence on U.S. payment systems, on the dollar as a settling money and so forth. It’s becoming an essential need,” Ryabkov was quoted as saying.

“(Otherwise) we will always sit on their hook, precisely what they want,” he said, referring to the USA.

Russia has already introduced a new national payment system to lower reliance on Western systems, such as Visa and MasterCard.

Those operators ceased providing services to customers of a single Russian lender after Washington imposed sanctions over Moscow’s role in the Ukraine crisis, including its annexation of Crimea from Kiev and assistance of pro-Russian separatists in southern Ukraine.

The Russian payment method is known as Mir, which translates as “World” or “Peace”.

“Your card is free of external elements. Produced in Russia,” runs an advertisement for Mir cards.

Up to now, more than 13.9 million Mir cards are issued in Russia, according to the Russian National System of Payment Cards (NSPK), roughly 10 percent of the nation’s population.

The Russian national payment system was created on 23 July 2014 and is 100 percent owned by the central bank. In Spring 2015, in the course of an all-Russia creativity competition, the name Mir and the brand logo were chosen.

The Operator of Mir Card Payment System is National Card Payment System Joint-Stock Company.

First Mir cards were issued in December 2015 in the framework of a pilot project. It is planned that Mir card will be widely spread across Russia. It is also envisaged to promote the card abroad under cobadging projects with international payment systems. Currently Mir Maestro, Mir JCB and Mir AmEx are already being issued.

Unlike international payment systems’ card transactions, Russian Mir card transactions cannot be suspended and no external economic and political factors can influence their processing. Moreover, Mir cards are welcome in sanctions-hit Crimea where Western banks are prohibited to operate.

Banks are reluctant to issue them, as their cost is 35%-45% higher compared to cards belonging to more established payments systems. However, according to media reports, the Mir card issuance will cost 1.5 euros per card compared with 2 euros for its foreign rivals.

More than 380 banks operating in Russia accept those cards that are issued by 120 banks. Virtually all trade and service points, such as cafes, shops, restaurants and gas stations accept payments using Mir cards.

In December 2016, the pilot version of Mir’s cashback loyalty program was launched. Russia’s National Payment Card System and the Central Bank of Russia numerously stressed that the cost of Mir cards would be lower than the cost of foreign rivals both for issuer banks and users.

Mir is heavily promoted by the Russian government, with proposed legislation mandating that all welfare payments should be processed through the system by January 2018.

Image source: [1]

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