More and more countries around the globe endeavor to create their own payment networks in an attempt to become more self-sufficient in payments and less reliant on U.S. based networks. Some of these platforms are more successful than others.
In Russia, as Finextra found, debit platform Mir has been very successful. Russia created the payment network after sanctions imposed from the West (due to the takeover of Crimea), cut off services from Mastercard and Visa. Fast forward six years and Mir, with persuasive mandates from the Kremlin about its usage and issuance, has now issued 75 million debit cards.
It will be interesting to see if Europe takes such a forceful tactic as it attempts to disavow the dominance of American payment systems on its shores:
While the task of eating into Visa and Mastercard’s dominance is daunting, figures from Russia show that it is possible.
According to GlobalData, as of 2020, 74.6 million debit cards have been issued by Mir, representing 28.62% of all debit cards in circulation. Mir’s market share is now 25.3% in terms of transaction value.
However, this has required heavy state intervention of the kind that Europe seems unlikely to follow.
Russia’s government 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.
Meanwhile, merchants with annual transaction turnover of more than RUB40 million ($0.5 million) are required to accept Mir cards. The threshold was reduced to RUB30 million in March and will drop to RUB20 million in July.
Chris Dinga, payments analyst, GlobalData, says: “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.”
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group