Post-Soviet states refuse to service Russia's Mir payment system

Banks in the countries of the Commonwealth of Independent States (CIS) refuse to service Russian payment system Mir. Generally, there is only one explanation to this — reluctance to fall under secondary Western sanctions. Yet, there are nuances.

Photo: freepik.com by Dragana_Gordic, PDM

Representatives for the National Bank of Kazakhstan said that they do not interfere in the operational activities of the country's banks nor do they give recommendations related to servicing Russian Mir cards.

"As a first-tier bank, we do not interfere in the operating system of second-tier banks. Banks, as commercial entities, independently make decisions on participation in a particular payment system. This is a matter of their commercial interests that meet economic feasibility. It is up to them to calculate their risks and benefits by having compliance services,” the press service of the National Bank of Kazakhstan said, RIA Novosti reports.

Even though the National Bank of Kazakhstan has not given any instructions to decline servicing Russian cards, some of the largest banks in Kazakhstan have already decided to refuse to service Mir cards.

One of such banks, Halyk Bank (People's Bank), stopped servicing Mir payment system cards on February 27. Bank representatives confirmed this information, but did not specify the reasons for it. They only referred to statements about "sanctions” that the West imposed against Russia.

Another major player in the market, CenterCredit, also stopped working with Mir cards early this year.

While some banks refuse to cooperate with the Mir payment system, others — for example, VTB — continue to service its cards in Kazakhstan.

The trend to decline Russia's Mir payment system is observed not only in Kazakhstan. Russia's National Payment Card System received a notification from the Elkart system of Kyrgyzstan about the decision to stop working with Mir cards from April 3. All banks in Kyrgyzstan, in order to avoid secondary sanctions, have stopped servicing Russian Mir cards.

The possibility of money transfers between banks of the Russian Federation and Kyrgyzstan will preserve after Mir cards are disabled, the National Bank of the Republic reported.

The payment system of Armenia also decided to stop working with Mir cards. The risk of secondary sanctions was also cited as a reason for the move.

The Bank of Russia has to react to the decrease in the number of banks that service Mir cards abroad. First Deputy Chairperson of the Central Bank of the Russian Federation Olga Skorobogatova said that the Russian regulator was considering the issue to expand the ATM network in the countries that stopped servicing Mir cards.

It is worth noting that government representatives of CIS countries previously stated that they would comply with the sanctions that the West was imposing on Russia. Therefore, the things that have been happening to Mir cards fit into the logic of those statements.

At the same time, Russia remains the leading trade and economic partner for many of those countries. The governments of CIS states are very well aware of that.