As of: April 8, 2024, 6:43 p.m
By: Lars-Eric Nievelstein
Comments
Press
Split
In 2014, Russia launched its own payment system. For a while there was growth. But now more and more states are jumping ship.
Moscow – Since the western industrialized nations hit Russia with a variety of sanctions, the country has still been able to rely on support from the global south and Asia. Because the USA and Europe are now further tightening sanctions, supporters are gradually turning away. India, for example, is looking for a new oil supplier; in China, several major banks had cut off trade with Russia. And now the Russian payment system Mir is crumbling.
Mir – Russian reaction to sanctions
Background: Russia had already deployed Mir in 2014. It was seen as a direct reaction to the first wave of sanctions by Western industrialized nations, which in turn followed the annexation of Crimea, which violated international law. The US had already imposed sanctions on the Rossiya Bank during the Crimean crisis. The financial institution is considered the house bank of close Putin allies. At that time, Russian President Vladimir Putin announced the creation of a “national credit card company”. “We absolutely need it, and we will do it,” the Russian news agency Interfax was quoted as saying at the time.
A view of the Rossija Bank in Rastrelli Square, Saint Petersburg. In 2014, Russia launched its own payment system. For a while there was growth. But now more and more states are jumping ship. © IMAGO / ITAR-TASS
In 2014, the US credit card companies Visa and Mastercard decided to stop the payment service for customers of Rossiya Bank and other Russian financial institutions. The Russian credit card system should represent an alternative and include as many countries as possible so that an effective counterbalance to the US market heavyweights would be created.
Countries are opting out of “Mir”.
As it now turns out, this plan fails. Armenia recently dropped out, and since Friday many banks in Kyrgyzstan no longer accept the Russian model. As the
Reuters
news agency reported, Samsung Pay, a payment service from the South Korean company Samsung Electronics, is also ceasing cooperation with Russia's Mir system. The Mir system is becoming increasingly important for Russians, but the future of MIR as an international payment option is uncertain. Russia itself stated in April 2023 that nine countries were integrated into the Russian payment service. These include, among others:
Belarus
Kazakhstan (limited)
Cuba (restricted)
Venezuela (limited)
A number of countries, including China, Jordan, Mexico and Syria, are currently discussing integration with Russia, and implementation is firmly planned in Iran and Mongolia (among others).
My news
This is how high the pension is if you have never worked read
German grocery chain is insolvent: read “Moral apostles who want to save the world”.
Many pensioners are entitled to more pension points - but these are only available upon application
Wave of bankruptcies takes the construction industry into a stranglehold: 30 bankruptcies in one weekread
Well-known manufacturer is insolvent: Heating specialist has to cancel sails due to market developments
Pension increase in summer 2024: This is how much money pensioners will receive on July 1st
According to the Kremlin, new US secondary sanctions are responsible for the decline. These state that business contact with the Russian company NSPK, which is under sanctions, can also lead to sanctions. Turkey, for example, left the system due to concerns about such possible sanctions.
Success of the West?
In the eyes of the United States, Mir plays a key role in financial transactions within Russia and between Russia and abroad. It is one of the reasons why Russia can circumvent some of the other Western sanctions. Handelsblatt
reported
that both Armenia and Kazakhstan have used alternatives to the Russian Mir system.
Despite everything, the economic impact of these departures should not have a catastrophic impact on Russia. Experts nevertheless see it as a success of the sanctions imposed by the West. The bottom line is that the crumbling of the Mir system is an “indicator of Russia’s dwindling economic attractiveness”.
Other countries could opt out in the future. Candidates for this include Tajikistan and Belarus.