01 Jun 2021
Posted in Banking
Mir is breaking Mastercard and Visa duopoly in Russia by eroding their market shares and establishing itself as a strong payment service provider, says GlobalData
- As of 2020, 74.6 million debit cards were issued by Mir, representing 28.62% of all debit cards in circulation
- Since 2016, while international schemes lost their market shares in the debit card space, Mir’s market share has risen to 25.3% in terms of transaction value.
- US and EU sanctions imposed on Russia in 2014 were the catalyst behind the creation of Mir
Mir – a payment service provider introduced in Russia in late 2015 – is carving a place in the market as a serious provider. Since it launched it managed to grow its market share in the debit card space by 25.3% in terms of transaction value, which was done by taking market share away from the dominants Mastercard and Visa. The migration to Mir was made possible by mandates that the Russian government impose on consumers and merchants. In the going years we should expect Mir’s market shares to continue growing at the cost of Mastercard and Visa. The lost of domestic market share will force Visa and Mastercard to focus on their role as international payment scheme and, according to GlobalData, a leading data and analytics company.
GlobalData’s latest report, ‘Russia Cards & Payments: Opportunities and Risk to 2024’, reveals that, as of 2020, Mir accounted for 28.62% of all debit cards in circulation in Russia – just behind Visa and Mastercard.
Chris Dinga, Payments Analyst at GlobalData, comments: “Russia is determined to reduce the influence of US payment providers in the country. In order to achieve this, it is strategically promoting the adoption of Mir via government mandates.”
The government has passed mandates requiring public sector employees receiving state funds and welfare benefits to migrate to Mir payment cards. A similar mandate was imposed on pensioners, making pensions accessible only through Mir bank cards. To accelerate adoption among merchants, a mandate was passed that required merchant stores with annual transaction turnover of more than RUB40m ($0.5m) to accept Mir cards. The threshold was reduced to RUB30m ($0.4m) as of March 1, 2021 and will fall to RUB20m ($0.3m) from July 1, 2021. The ongoing reduction of this threshold will accelerate the acceptance of Mir cards among merchants.
Dinga continues: “Sanctions imposed by the US and the EU over the Ukrainian crisis in 2014 were a catalyst that forced Russia to introduce its own payment service to reduce its dependence on US payment providers. Prior to the introduction of Mir, 90% of debit card transactions in Russia were processed by Mastercard and Visa. Between 2016 and 2020, while international schemes lost their market shares, Mir’s share rose from just 0.7% to 25.3%. Mastercard and Visa can expect to see their market shares decrease further in the coming years as the government will continue to pass mandates to support the adoption of Mir cards across the population.”
The growth of a domestic scheme such as Mir is an example that other countries can follow if they want to break Mastercard’s and Visa’s duopoly in their territory.
Dinga concludes: “Governments can introduce payment schemes and take over the domestic transaction landscape by driving adoption via mandates and regulation. Indeed, this could be the model the European Commission follows when it launches its own payment scheme, the European Payments Initiative (EPI).”