Almost all banks in Armenia have taken steps to block transactions using Russia’s Mir payment cards, following the imposition of US sanctions on the system’s operator last month.
According to a statement issued by Russia’s National Card Payment System (NSPK), local banks will stop servicing Russian Mir payment cards as of 30 March.
The statement noted that this does not limit their work with foreign partners and that banks outside Russia will not be forced to accept payments, the RIA Novosti agency reported.
“Armenia’s commercial banks have decided to stop cooperation with the Mir payment system,” the Union of Banks of Armenia also told Sputnik Armenia, pointing to the risk of secondary sanctions.
By the end of the month, 17 of Armenia’s 18 commercial banks will stop processing Mir transactions through the country’s local payment system ArCa.
Only VTB Armenia, the local subsidiary of one of Russia’s largest lenders, will continue to accept Mir cards.
The Central Bank of Armenia said in a statement that the country’s banks took the decision to stop Mir payments ‘independently’ and based on ‘their own risk management strategies’.
Last month, the US blacklisted the NSPK along with some 500 organisations in Russia and around the world in a sweeping sanctions package.
“Mir enabled Russia to build a financial infrastructure that facilitated its efforts to evade sanctions and rebuild its broken links to the international financial system,” the US Treasury Department said in a statement.
Moscow began developing Mir in 2014 as a way to circumvent sanctions imposed by the West after Crimea was annexed by Russia in a referendum, and the conflict in Donbass broke out. Since then, the NSPK, which operates as a subsidiary of the Bank of Russia, has issued more than 287 million cards, according to RBK.
Following the withdrawal of Mastercard and Visa from the country in the wake of Russia’s military intervention in Ukraine, Mir cards have become the preferred payment method for Russians. This includes members of Armenia’s large Russian expatriate community.
Over the past two years, Armenia’s banks have made record profits thanks to unprecedented inflows of money, particularly from Russia. In total, the country’s banks made more than $1.2 billion in profits during this period, according to the Banking Union.
In its latest update last month, Fitch said it expected “Armenian banks’ credit metrics to remain above historical averages until at least 2024-2025”, citing continued “migration and capital inflows from Russia”. According to official figures, at least $7.5 billion has flowed into Armenia from Russia since 2022.
