Payment systems of friendly countries refuse Russian Mir cards

The possibilities for using Mir cards even in neighboring countries are significantly reduced. This week, the Kyrgyz payment system Elkart announced the termination of their acceptance due to sanctions against the National Payment Card System. At the end of March, a similar decision of the Armenian ArCa came into force. The national payment systems of Tajikistan and Belarus may follow their example due to the threat of secondary sanctions. In countries where payment systems make such decisions, Mir card holders are left to conduct transactions through subsidiary Russian banks.

The Interbank Processing Center (IPC) (operator of the Kyrgyz payment system Elkart) announced the cessation of servicing Mir bank cards in its infrastructure from April 5 due to the termination of relations with the National Payment Card System (NSPC).

The decision is due to the fact that on February 23, OFAC imposed sanctions against NSPK, the operator of the Russian payment system. As a result, in Kyrgyzstan, users of Mir cards will no longer be able to make non-cash payments at POS terminals, cash withdrawals from ATMs, transfers from card to card, and Internet payments from cards to accounts of trade and service enterprises.

The NSPK received a notification from Elcart. However, it states that transactions using Mir cards will cease to be carried out from nine in the morning Moscow time on April 3. At the same time, the NSPK noted that on the side of the Russian payment system, no restrictions were introduced on working with international partners. “Foreign banks and payment systems independently decide whether to accept Mir cards in their infrastructure, including taking into account the assessment of the risk of secondary sanctions,” the NSPK stated.

A similar step has already been taken by the Armenian payment system ArCa, which stopped accepting Mir cards in its infrastructure from March 30 due to the imposition of sanctions on the NSPK.

However, in Armenia, VTB Armenia Bank will continue to work with Russian cards, which serves them in its entire infrastructure – cash withdrawals from ATMs of this bank, payment for services in online banking, transfers are also available, including cross-border ones. Also, according to the agency TASSVTB Bank (Kazakhstan) continues to service Mir cards, whereas previously a number of Kazakh banks stopped servicing them.

As a source in the banking market told Kommersant, NSPK has agreements with national payment systems similar to agreements with ArCa and Elkart with the Belarusian Belkart and the Tajik Korti Milli. He admits that these payment systems in the foreseeable future may also sever relations with the NSPK, since both Belarusian and Tajik banks still issue cards of international payment systems, which are also actively lobbying for the cessation of work of banks in the CIS countries with Mir cards.

According to the head of the Association of Electronic Money and Transfer Market Participants, Viktor Dostov, whether their colleagues from other neighboring countries will follow the example of the Armenian and Kyrgyz payment systems is a matter of balance between their international obligations and economic interests. “These countries are obviously interested in accepting Mir cards, since these are tangible financial flows, but it is also obvious that they absolutely do not want to fall under secondary US sanctions,” he explained. According to the head of the Financial Innovations Association, Roman Prokhorov, the risks of terminating cooperation only with Belkart are minimal.

In general, payment market participants believe that soon in neighboring countries it will be possible to pay with a Mir card only where POS terminals of Russian banks are installed, as is done in tourist resorts in a number of countries (see “Kommersant” dated October 27, 2022).

First Deputy Chairman of the Central Bank Olga Skorobogatova, at a meeting of the working group at the State Duma Committee on the Financial Market on April 2, said that the issue of expanding their network of ATMs and POS terminals abroad is being discussed with Russian banks.

Banks from neighboring countries can establish direct contacts with Russian credit institutions to accept Mir cards, payment market participants note. In this case, they will turn to Russian banks, which are not subject to restrictions, believes Viktor Dostov. In addition, he clarifies, the implementation of such projects will require investments and it is unknown how much they will be repaid by the financial flows that will go through such a channel. Moreover, foreign banks, Roman Prokhorov believes, will still “be under the risk of secondary sanctions, so you need to be prepared to reduce the Mir card acceptance network.”

Maxim Builov