GENERICO.ruEconomicsMir cards are under US sanctions: how will this affect users

Mir cards are under US sanctions: how will this affect users

The foreign banking operations of Russians may be under attack

On the two-year anniversary of the start of Russia’s special operation in Ukraine, the United States announced the introduction of new sanctions against our country. In addition to military enterprises, the financial sector was under attack this time. Nine banks and the National Payment Card System (NSCP), the operator of the Mir payment system, were sanctioned. MK found out from experts how new bans on the payment market will affect Russians and the financial market as a whole.

The foreign banking operations of Russians may be under attack

In response to the aggressive actions of the Americans, the NSPK itself stated that US sanctions will not affect the operation of payment services within Russia. Processing of cards from international payment systems issued by domestic banks within our country is proceeding as usual. Services of the Mir payment system and operations through the Faster Payment System (FPS) are fully operational.

It is appropriate to remember here that the NSPK was established as a response to the sanctions restrictions of Western countries after the annexation of Crimea in 2014, so it is its task to protect against similar attacks. “NSPK was created in order to work, including under conditions of sanctions, therefore, there will be no special consequences: all NSPK counterparties work with the system, taking into account the inevitability of restrictions,” says Artem Tuzov, director of the corporate finance department at IVA Partners.

As for accepting Mir cards abroad, each credit institution makes a decision on this independently, the NSPK recalled, so the organization itself recommends that Russians abroad withdraw cash from their cards. Moreover, this advice concerns not only the Mir card itself, and its co-branding options – that is, bank cards that are simultaneously “connected” to two payment systems, in particular, the Russian Mir and the Chinese UnionPay.

Abroad, the working conditions of NSPK have been deteriorating for a long time. “International settlements have been difficult since the fall of last year, when control over compliance with trade restrictions against Russia was tightened and the risks of introducing secondary sanctions appeared,” recalled Associate Professor of the Department of State and Municipal Finance of the Russian Economic University. Plekhanov Mary Valishvili.

The day before, an announcement appeared in a chat among users of the Chinese payment system “UnionPay in Russia” that a bank specializing in agriculture had notified its clients that “Mir”-UnionPay cards may stop working abroad, so their owners would be better off withdrawing cash. However, later this ad disappeared.

There are fears that UnionPay cards may also stop working for compatriots, under the pretext that transactions of the Chinese payment system within Russia go through the NSPK, which is “prohibited from cooperation.” However, so far ordinary users of UnionPay cards abroad have had transactions without any complaints. Often the owners of these cards are relocants, for whom this is actually the only opportunity to receive a salary for remote work for a Russian company. Let us remind you that UnionPay cards in our country are issued by four banks and this is the result of sanctions, since a year ago there were 10 of them.

And there are even fewer “Mir”-UnionPay co-branded cards: in our country only two banks issue them, so in theory, those who will be affected by US sanctions will be few. “Most Russians will not suffer, but there is nothing good in the fact that the West is consistently tightening sanctions against the financial system,” emphasizes financial analyst Andrei Vernikov. “Judging by the development of events, the Russian financial sector will be toxic for our partners, including friendly ones, for a very long time.”

Among the consequences of sanctions, analysts often point to difficulties for the Mir card operator itself in doing business. “NSPK may encounter difficulties when purchasing software or equipment,” says Vagiz Nurullov, managing partner of VG Group. “However, due to the company’s extensive experience of operating under pressure, I think it will not feel significant changes.”

At the same time, it is obvious that the plans of the “World” card to conquer the international market due to US actions may be completely revised. If earlier NSPK sought active expansion abroad – it made plans to launch joint projects in the United Arab Emirates, the Maldives and other parts of the world, and also intended to expand its presence in Venezuela, Vietnam, Cuba, Belarus, Armenia, Kazakhstan, Kyrgyzstan and Tajikistan, now many plans are in question. Violation of the US sanctions regime under the article on cooperation with Russia could result in serious liability for many foreign partners, including criminal liability, and a strong blow to business. In such conditions, one can only count on uninterrupted cooperation between NSPK and the banks of Iran, North Korea and Belarus, that is, in countries that have long learned to live without looking back at the actions of the United States.


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