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 imposed on consumers and merchants.
In the coming years we expect Mir’s market share to continue growing at the cost of Mastercard and Visa.
The loss of domestic market share will be a blow to Visa and Mastercard in what is a potentially a massive and fast growing market as Mir accounted for 28.62% of all debit cards in circulation in Russia – just behind Visa and Mastercard.
However, as the European Union starts to ramp up its coalition in the European Payments In initiative (EPI), the fact that Mir has been able to take a decent market share in a short period of time will certainly raise some eyebrows.
That said, clearly, whilst the EU members states are seeking to support EPI there is very little chance that the same level of governmental mandates will be implemented by the EU unless they wish to face stringent retaliation from the US.
“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,” says Chris Dinga, Payments Analyst at GlobalData.
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 RUB 40 million ($0.5 million) to accept Mir cards. The threshold was reduced to RUB 30 million ($0.4 million) as of March 1, 2021 and will fall to RUB 20 million ($0.3 million) from July 1, 2021.
The ongoing reduction of this threshold will accelerate the acceptance of Mir cards among merchants.
“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,” continues Dinga.
“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.”
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