Financial systems run on trust. This is a reason why credit card companies charge you a higher interest rate than normal. Vice-versa, they should ensure that their consumers feel that these companies won’t leave when you need them most. But, VISA and MasterCard did not abide by this principle. Now they can’t blame MIR and RuPay for replacing them.

MIR-RuPay cards swap

According to reports available in the public domain, the India-Russia economic cooperation is extended to the payments domain. There is a high possibility that within a short period of time, Indian ATMs and PoS terminals will start accepting MIR debit and credit cards. In exchange for India’s opening its gateway for MIR, Russia will remove every kind of hurdle coming in the way of acceptance of RuPay cards in the Soviet territory.

Indian ATMs and terminals may soon start accepting Russian Mir debit and credit cards, India’s Deccan Herald news outlet reported on Sunday.

According to the newspaper, in return, Russia is likely to “clear the way” for Indian RuPay cards to be accepted in the country. Currently, the parties are also reportedly discussing options for the mutual implementation of interbank transfer services, India’s Unified Payments Interface (UPI), and SPFS, the Russian version of SWIFT.

In addition, according to the news outlet, India and Russia are continuing negotiations on expanding the use of national currencies in bilateral trade and discussing creating a new reserve currency within BRICS.

Russian Deputy Foreign Minister Alexander Pankin has also confirmed that Moscow was negotiating with New Delhi on the use of Mir cards.

“The unjustified blocking of all Russian clients by the largest international card payment systems has made it important to expand the geography of Mir cards. We are actively working in this direction,” he said last week, adding that discussions about this matter are also being held with Egypt, China, Azerbaijan, Bahrain, Cuba, Myanmar, Nigeria, and Thailand.

Russian Mir payment cards currently can be used in 11 countries: Abkhazia, Armenia, Belarus, Vietnam, Kazakhstan, Kyrgyzstan, Tajikistan, Turkey, Uzbekistan, South Korea, and South Ossetia.

In the last week, various developments in this regard have been reported. Firstly, Ajit Doval paid a sudden visit to Russia.

The fact that the National Security advisor met with the Russian Minister of Industry and Trade added fuel to the fire around the MIR-RuPay exchange.

Rupee-Rouble is just around the corner

Moreover, 15 Russian banks are negotiating with Indian banks for sorting out issues related to Rupee-Rouble transactions in bilateral trade.

According to a report by The Economic Times, Petersburg Social Commercial Bank, Zenit Bank, and Tatsotsbank are some of the banks involved in negotiations from the Russian side. From the Indian side, SBI, Bank of India, Canara Bank, Uco Bank, Bank of Baroda among others are leading the discussion.

VISA and MasterCard losing big

The collaboration between India and Russia may end up hitting the final nail in the proverbial coffin of American Card companies like VISA and MasterCard. Earlier this year, both these companies felt compelled to participate in the faux sanction regime of the United States. They suspended their operations in Russia. The bankruptcy of pragmatism may end up making them financially bankrupt.

Though MIR was carving out its own niche in Russia, its growth was slow. After its inception in 2014,  which was necessitated by Crimea-related sanctions, MIR cards could only dominate 12 percent of Russian markets between 2016-2020.

On the other hand, the combined share of VISA and MasterCard was more than 80 percent. The moment both these companies decided to leave Russia in times of its need, they lost millions of customers, resulting in an annual revenue loss to the tune of $1.5 billion.

Suicidal attempts by American companies

The self-goal by VISA and MasterCard looks more foolish when you consider the fact that both were already on a losing spree in the Indian market. The introduction of RuPay cards and the financial inclusion drive of the Indian government had already snatched a major section of its market share in the Indian Card market.

By the end of 2020, RuPay had released more than 60.3 crore cards. Its debit Card is particularly popular among the Indian masses. With the linking of UPI with RuPay credit cards, it is ready to eat into the remaining 80 percent share of foreign credit card issuers as well.

Though it is bad for American card companies, it did not come off as a surprise. There was a certain inevitability to it. Yes, it is true that companies should abide by the principles of governments of their foundational jurisdiction.

However, it is also true that the government is not always right. These companies knew that sanctions were futile and still they participated in it. They handed their failures on a platter.

rt.com