Russia to debut MIR payments in London, in a bid to build alternatives to Visa, Mastercard

MIR, a Russian-backed bank payment system, is set for its European debut, when a pilot project will be launched in collaboration with PayXpert, a Dutch global payment company.

Initially, MIR was launched as a national payment system, with the first cards issued in December 2015. MIR was rolled out after Western sanctions upended Russia’s financial system and prompted Visa and Mastercard to deny electronic services to some of the country’s large banks.

Sberbank, Russia's state-owned bank, started issuing the cards in October 2016, and by the end of 2018 more than 70 million MIR-based cards had been issued by 64 Russian banks. The Kremlin has mandated that state welfare and pension payments must be processed through the system by 2020, along with salaries paid to civil servants.

Moscow authorities hoped to get the MIR card accepted eventually in foreign markets. Still, it is not accepted by international shopping platforms or major online booking services for airlines and hotels, although APEXX Fintech, a British startup global payment company, announced it would now start working with the MIR system, according to News Gram.

Vladimir Komlev, the head of Russia's National Card Payment System, told Reuters that over ‘the next three years we want MIR cards to be operational in countries where Russians are used to traveling’. So far, Turkish banks started to conduct transactions in 2019 with MIR.

The effort is seen by analysts as part of the Kremlin bid to de-dollarise the Russian economy to lessen the sting of Western sanctions. Russia's Central Bank has currency swap deals in place with Iran, China and Turkey, allowing direct trade to be conducted in local currencies instead of US dollars, the online publication added. In August 2019, the state controlled Rosneft oil company announced it would stop using the US dollar for its export contracts.

Nonetheless, analysts say there are limits on how far Russia can de-dollarise — the ruble is highly volatile and remains unattractive for investors and de-dollarisation brings additional and sometimes prohibitive trading costs, News Gram continues.