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What is the MIR payment system that Russia is so proud of?
after all sanctions that Russia has received for the invasion of Ukraine, the country's economy has been seriously affected. In particular, payment systems, since companies such as Visa and Mastercard stopped providing their services.
In order to shovel this problem and anticipating events, for some years in the country there is an alternative payment system. This system is known as MIR (means "peace" in Russian), which seeks to make the country independent of traditional means of payment.
Today, we are going to talk a little about what this payment system is and how it works.
What is the MIR payment system?
MIR is simply a payment infrastructure designed in Russia that allows money to be transferred electronically. This offers everything that Visa or Mastercard does, but the entire process is done within the country.
It was founded in 2015 after the Russian invasion of Crimea and when international sanctions began to be implemented on the country. Anticipating events, the government began to work on this system.
Since 2016 it began to operate, but it was not until 2017 when it became a "mandatory" system for financial institutions in the country. Many Russian companies and other businesses have adopted this means of payment, which meant that at the time the war broke out, around 50% of operations were carried out through this system.
In fact, by the end of 2021, according to official data, around 110 million cards had been issued in the country. It is important to mention that the cards issued are Visa or Mastercard, but these do not use their own system, but MIR.
All this makes the system extremely useful and necessary within Russia, but useless outside its borders.
Why has it been created?
As we already mentioned, this system is born from the country's need to face foreign economic sanctions. MIR has become Russia's option to try to mitigate the effects of sanctions, however, it is not known to what extent it can become a useful system.
At this time, when the country is facing a great number of challenges, it makes this system more necessary than ever. However, it still has a long way to go before it becomes a true alternative to Visa and Mastercard.
What can you offer?
Due to the fact that the majority of transactions were handled through the Visa and Mastercard systems (foreign servers), this meant that the country did not have any type of control. Today, the MIR payment system has been introduced in the market, occupying the place left by other companies.
These types of cards have the latest technologies, both in security and in payment processing. This means that banking entities can offer a large number of services to their clients through MIR.
The fact that the system is local means that the costs are also lower, which is extremely positive. Without a doubt, MIR offers a large number of options for users, which makes the Russian government so interested in continuing to implement it.
Main characteristics of this payment method
This system has several characteristics that are important for the country. And it is that, MIR is a system that gives the country great independence, they will not need third parties to be able to carry out their transactions.
Some of the main features that this system can offer include the following:
It was designed in-house by software experts and built from scratch, as no pre-existing algorithms were used.
It complies with all international standards for payment systems.
It makes the country totally independent from other types of systems.
All the infrastructure and software that is used is local, so it is isolated from any type of foreign sanction.
It is a secure and robust system that allows encrypted transactions.
Although these are the main features that the system offers, they are not the only ones, since it has many more. It is a quite interesting system that can change things for the country.
Does it really have a future?
Due to the latest sanctions that the country has received and the departure of the main payment processors, it has begun to occupy the market, at least within Russia. In other words, to make local payments, this is a very interesting option to avoid sanctions.
However, internationally it is another matter, the dominant platforms are Visa and Mastercard. MIR is only accepted by a handful of banks in Vietnam, Turkey, South Ossetia and Thailand.
So, at the moment, these MIR cards are not useful for those who want to travel. However, Russia has been looking for allies for this system such as China, Belarus or Venezuela. However, due to the invasion, there are not many countries interested in supporting Russia.
In short, at the local level, this system will end up becoming the main one, filling the void left by Mastercard and Visa. However, internationally, it is still in its infancy, so it is not very useful.
In any case, we will have to wait to find out what movements the country will make. However, it is unlikely that this system can really take off, especially outside of Russia.
