The Mir card has new problems in the CIS: three more countries may refuse

The Bank of Russia proposes to resolve the issue by expanding domestic banks abroad

Problems with accepting Mir cards in neighboring countries are growing. At the end of March in Armenia, all banks participating in the national payment system Armenian Card (ArCa) stopped servicing them. Then a similar decision was made by the Kyrgyz payment system Elkart and the largest bank in Kazakhstan. And now it became known that the Belarusian Belkart and the Tajik Korti Milli may refuse to service Mir cards. They are all afraid of secondary US sanctions. Why even our closest neighbors refuse to cooperate with the Russian payment system and how the Central Bank is going to solve these problems – in the material of MK.

The problems of the Russian Mir payment system abroad are growing like a snowball. Let us recall that in September 2023, all banks in Turkey refused to accept cards from this system. At the beginning of 2024, difficulties with accepting payments from companies and individuals arose in China and the UAE, which makes it almost impossible to implement previously planned plans for cooperation between the Russian Mir and local payment agents.

These are all friendly countries and it is a pity for unrealized projects, but refusal to cooperate with it in the CIS countries may be especially painful for the development of the domestic payment system. Since March 30, the Armenian payment system ArCa and all local partner banks have stopped accepting Mir cards in their infrastructure. From April 5, the Interbank Processing Center of Kyrgyzstan, which is the operator of the Elkart system, will stop working with the National Payment Card System (NSCP). Users will no longer be able to access services such as card payments in acquiring devices, card-to-card transfers, and all e-commerce—online payments from cards to accounts of merchants and service providers.

But the bad news for Mir didn’t end there. The Belarusian payment system Belkart and the Tajik Korti Milli may refuse to work with NSPK. In all of the above cases, the reason is the same – local payment systems are afraid of the consequences of secondary US sanctions. “The threat of secondary sanctions for banks from the CIS countries and even the EAEU is high and they are afraid of blocking their assets in the West,” says Lazar Badalov, associate professor of the Faculty of Economics of RUDN University. “After all, banks focus not only on where they can earn more, but also where there is a risk of loss.”

At the same time, neighboring countries are highly dependent on the Russian economy. Thus, according to World Bank data for 2021, the share of remittances from labor migrants from Russia to the GDP of Kyrgyzstan and Tajikistan reached 30% of GDP. Some of the listed countries have been important hubs for Russia’s “gray” imports for many months, such as Kazakhstan and Kyrgyzstan, from which they make good money. However, as can be seen from the actions of financial agents, they fear secondary sanctions from the United States more than ruptures in trade relations with our country. “The interests of the CIS countries and the interests of financial institutions of the CIS countries are different things and different groups of beneficiaries,” says Associate Professor of the Department of Finance for Sustainable Development of the Russian Economic University. Plekhanov Mikhail Gordienko. — For financial institutions, the priority is clear: it is important for them to maintain access to the global financial market, to technologies, data exchange channels, and counterparties. Therefore, the choice is as pragmatic as possible: to avoid sanctions from the global financial regulator, which the United States still remains.” And migrants’ transfers have long been realized through Russian banks: we should expect that the demand for these products will further increase, the expert pointed out.

The Bank of Russia is aware of the problems with servicing Mir cards and is looking for a solution. The day before, First Deputy Chairman of the Central Bank of the Russian Federation Olga Skorobogatova, speaking in the State Duma, said that among the possible options are expanding the network of ATMs of foreign subsidiaries of Russian banks and using the Faster Payments System. Another answer could be the creation of joint banks, “tailored” to servicing transactions with Russians and not afraid of sanctions. Turkey has been considering this option for about a year, although no decision has been made on it.

“In addition, in friendly countries where there are no subsidiaries of Russian banks, it is possible to create networks of ATMs and POS terminals that are processed in Russia, in places where Russians are concentrated,” suggested Maxim Osadchiy, head of the analytical department of BKF Bank. At the same time, even if all EAEU banks, under pressure from the United States, stop servicing Mir cards, there will still be countries where they will be accepted. It is unlikely that Venezuela and Cuba, which are under sanctions, will refuse this opportunity: they have nothing to lose. The same applies to South Ossetia and Abkhazia. In the future, it is possible that Mir cards will also be accepted in Iran, as negotiations are currently underway on this matter, the analyst recalled.