Five Turkish banks to adopt Russia's Mir payments system

Monday 8 August 2022 13:33 CET | News

Five Turkish banks have adopted Russia’s Mir payments system, Turkey’s President Recep Tayyip Erdogan said after talks with President Vladimir Putin.

According to Bloomberg, there are serious developments regarding the work that Turkish banks are doing on Russia’s Mir card.

As Mastercard and Visa have halted operations in Russia, Mir card payments will allow Russian tourists to pay for their purchases in Turkey.

Payment in rubles will be a source of financial support for both Russia and Turkey, as mentioned by Bloomber. Putin and Erdogan agreed to start moving to partial payment in rubles for deliveries of natural gas at talks in Sochi.

Besides, the Russian President Vladimir Putin and his Turkish counterpart, Recep Tayyip Erdogan, agreed to boost bilateral trade and take steps to work more closely in the transportation, agriculture, industry, and finance sectors.

Therefore, as mentioned by the Washington Post, Russia requested that several state-owned Turkish banks allow correspondent accounts for Russia’s biggest banks and that Russian industrial producers be allowed to operate out of free economic zones in Turkey.

The relationship between Russia and Turkey

The Turkish leader's meeting with Putin came three weeks after they met in Iran. The deepening of the relationship between the two countries is worrying Western officials, some of whom are thinking about punitive actions for Turkey, such as asking companies to reduce financing to Turkish firms. There have been no official talks about such actions for Turkey so far, according to Financial Times.

Five Turkish banks have adopted Russia’s Mir payments system, President Recep Tayyip Erdogan said after talks with President Vladimir Putin.

While Turkey voiced its opposition to Russia’s invasion of Ukraine, it has refrained from joining US and European sanctions on Russia. It has also continued to import energy from Russia, which provided a quarter of its crude oil imports and around 45% of its natural gas deliveries in 2021.

Russia has also provided foreign-exchange liquidity to Turkey by transferring billions of dollars to a Turkey-based subsidiary of Rosatom for completion of a nuclear power plant’s construction on the Mediterranean coast.

Turkish ministries are also working to broker an agreement on Russian grain exports, Erdogan said. Scores of ships are stuck in ports dotted along the Black Sea. Ukraine made its first shipment of grain since Russia’s invasion on August 1, 2022.

Russia’s alternative payments system – Mir

As Russia grew isolated by the rest of the world and piling on the burden on the SWIFT ban and major card schemes leaving the financial space, Russian banks have turned towards new ways of operating, looking at the possibility of issuing cards using their own payments system Mir and China’s UnionPay, as this solution would allow them to make payments overseas, with UnionPay operating in 180 countries and regions.

More than 100 million Mir cards are in circulation, about one-third of total market share, thanks to mandates for use by civil servants and pensioners. A digital wallet, Mir Pay, launched in 2019, continues to operate on Android devices.

More recently, Iran has announced it is considering starting to accept payments with the Mir bank cards as well.

Nigeria’s ambassador to Russia, Abdullahi Shehu, has also said that Nigeria and Russia are discussing the possibility of using the Russian Mir payment system cards in the African country.

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Keywords: banks, payments , Russia Ukraine War, partnership, e-wallet
Categories: Banking & Fintech
Countries: Turkey
This article is part of category

Banking & Fintech