Russia to expand Mir payment network to wean itself off Visa and Mastercard

Russia is planning to expand a payment network that will break the country's reliance on Visa and Mastercard.

The Kremlin has long sought to break the American duopoly on the payment system, but has repeatedly failed to get plans off the ground.

However, after Russia was hit with a wave of EU and American sanctions following its annexation of Crimea, many local banks had their transactions blocked creating a renewed impetus for the plans.

Russia since reached deals with Visa and Mastercard to restore services, but started developing the network – known as Mir, the Russian word for "world" and "peace" – in the meantime.

After initial trial runs and small-scale rollouts, Mir was launched in 2014, but with conventional payment systems in place and a reluctance to change, ordinary Russians were slow to pick up the service.

Now, with the Russian government confident in its functioning, it has announced a major expansion of the system.

Pushing the expansion forward, the state-controlled Tass news agency reported that President Vladimir Putin has this week signed into law a move which means all state employees must switch over to the payment network to receive their wages by 1 July 2018.

Retirees will also be required to receive their pensions on Mir cards from 1 July 2020.

The law also declares that all businesses with transactions of over R40m (£530,000, $690,000) must start accepting Mir cards by 1 October 2017.

Over 350 banks have now adopted Mir and are ready to process transactions, according to Tass.

The news agency also reported that over 5 million Mir cards were now in circulation and more than 200,000 Mir ATM machines have been put in place.

Russian media also reported that Mir was in talks with Mastercard in order for transactions to be accepted globally, but a conclusion has yet to be reached. Mir reached a similar deal with Maestro in 2015, but its impact was limited because of the company's narrower reach.