The Russian payment card market evolved at a rapid pace during 2014-18, with the country’s consumers enthusiastically embracing new technologies and increasingly favoring card-based payments for low-value transactions. The introduction of national payment scheme Mir also provided a much-needed push to overall payment card market growth, says GlobalData, a leading data and analytics company.
GlobalData’s latest report, ‘Payments Landscape in Russia: Opportunities and Risks to 2022’ states that while international scheme providers Mastercard and Visa continue to dominate the Russian card market, they have experienced a dip in their cumulative market share owing to rising adoption of Mir cards.
Mir was launched in December 2015 by the Central Bank of Russia. There were over 40 million Mir debit cards and 1.3 million credit cards in circulation in 2018, issued by over 140 banks. To increase acceptance in international markets, these cards are co-badged with international schemes.
This growth in Mir card adoption has been supported by concentrated government efforts, large-scale card issuance by banks and widespread merchant acceptance. The introduction of benefits in the form of reward programs and cashback will further drive usage among card holders.
Shivani Gupta, Payments Analyst at GlobalData, explains: “Mir payment cards are increasingly preferred by Russian merchants due to their comparatively low acceptance cost. An interchange fee of 0.8% on debit cards and 1.3% on credit cards is charged – which is much lower than Mastercard’s 1.50% on debit cards and 1.55% on credit cards.”
Meanwhile, a federal law – mandating that all public sector employees migrate to Mir cards by July 2018 in order to receive their government welfare benefits into their linked bank accounts – further accelerated its adoption.
Gupta concludes: “The growing adoption of Mir is now posing significant challenges to the international players, thereby disrupting the overall Russia payment card space – especially the debit card market.”