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Russia and Iran have completed the pairing of their national payment systems, which will allow travelers from the two countries to use their domestic debit cards for purchases in either Iran or Russia. Both countries are currently suspended from the SWIFT international payments system, with the non-SWIFT pairing of Russia and Iran significant as it is the first major use of alternative technologies to permit such transactions. The Russian and Iranian economies combined are valued at US$2.62 trillion, about the same size as the United Kingdom. Russia-Iran bilateral trade is worth about US$65 billion, and can be expected to significantly increase now these payment systems area aligned.
The Central Bank of Iran (CBI) Governor Mohammad-Reza Farzin, speaking on Monday (November 11) described the connection of Russia’s Mir and Iran’s Shetab payment systems as a major step towards economic cooperation and de-dollarization, as well as facilitating economic and tourism relations between the two countries. He stated that “This project started with the aim of creating integration in the payment networks and facilitating financial transactions between the citizens of the two countries.” noting also that the process will consist of three phases.
According to Farzin, the first phase is the use by Iranian nationals of their banking cards in Russian ATMs. Iranian tourists in Russia can now receive Russian Rubles from Russian ATMs by using the Iranian Riyal balance on their Iranian Shetab cards.
In the second phase, Russian citizens will be able to withdraw cash in Iran using their domestic bank cards. In the third phase, Iranian Shetab cards will become acceptable at point-of-sale (POS) terminals installed in Russian stores.
Farzin had earlier told reporters that the agreement to connect the two countries’ domestic payment systems was finalized during a meeting with his Russian counterpart Elvira Nabiullina on the sidelines of the Financial Congress of the Bank of Russia in St. Petersburg in July.
Tehran could also begin using Mir cards for settlements with other international partners.
Russia started developing its own national payment system when the US and its allies targeted the country with sanctions in 2014. Russian Mir cards entered circulation in December 2015.
Mir cards are accepted in a number of countries, including Belarus, and with certain limits in Armenia, Kazakhstan, Kyrgyzstan, Tajikistan, Cuba, Venezuela, and Vietnam, although the US sanctions has forced some banks in Armenia, Kyrgyzstan and Kazakhstan to halt transactions and stop accepting Mir cards. Meanwhile, another 15 countries have reportedly expressed an interest in accepting Mir cards on their territory.
The Russia-Iran linkup will pave the way for more of these types of bilateral and multilateral financial payments systems as SWIFT is no longer considered neutral or free of geopolitical risk.
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