"Between a rock and a hard place": Armenian banks will no longer service Russian "Mir" cards
Armenia affected by sanctions against Russia
Armenian banks stopped servicing “Mir” cards from March 30. Only VTB-Armenia, a subsidiary of the Russian VTB Bank, continues operations through the “Mir” system.
“MIR” is a Russian national payment system introduced in Armenia since 2017. In February, it came under U.S. scrutiny for allegedly helping Russia bypass sanctions and maintain ties with the international financial system.
Commercial banks terminated cooperation with the “Mir” system fearing sanctions. According to the Armenian Banking Association, this is linked to the package of sanctions imposed by the U.S. Department of the Treasury in February. The Central Bank of Armenia stated that commercial banks independently decide which payment systems to cooperate with based on their risk management strategy.
Armenian economists speculate that this decision could seriously impact the country’s economy. However, some view it as the “lesser evil” compared to the potential consequences of rejecting international standards.
Commenting on this decision, Dmitry Peskov, the spokesperson for the Russian president, stated that he does not consider the decision to stop servicing “Mir” cards as an “unfriendly” move against Russia. He believes it is a result of the unprecedented sanctions pressure exerted on Armenia by the United States.
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Armenian banks are simply trying to avoid Western sanctions, according to economist Suren Parsyan.
He emphasizes that Armenia remains heavily dependent on the Russian economy, which could lead to a crisis.
Before the Russian-Ukrainian war, around $1 billion was annually transferred from Russia to Armenia, claims Parsyan. However, in 2023, individuals alone transferred nearly $3.9 billion from Russia to Armenia.
“Out of these $3.9 billion, $3.1 billion were transferred for commercial purposes, meaning individuals from Russia purchasing goods, clothing in Armenia. Of course, a significant portion of these $3.1 billion was transferred through ‘MIR’ cards,” explained the economist.
According to him, the use of these cards revitalized trade and public services in Armenia.
The West imposed sanctions on Russia’s financial and banking system due to the Russian-Ukrainian conflict, the expert reminds. “MIR” cards ceased to operate in all Western countries, and even Kazakhstan completely abandoned them.
“Sanctions against ‘MIR’ cards are tightening every day. Certainly, Armenian banks could not stay away from this process. Under pressure from the West, commercial banks in Armenia declare that they are discontinuing their service,” says Parsyan.
The cessation of operations with “MIR” payment system cards may cause complications for Armenian exporters, believes economist Agasi Tavadyan. He says that 43 percent of Armenia’s exports go to Russia, so Armenian businessmen may face difficulties:
“The problem is that Russia is currently cut off from the global financial systems. International cards don’t work there. This will create additional challenges for Armenian businessmen and lead to increased incidental expenses.”
Agasi Tavadyan warns that as a result of this decision, many businessmen working in the Russian market will have to abandon other banks and use the services of “VTB-Armenia.”
The economist believes that Armenian banks are “between a rock and a hard place”:
“On one hand, they are forced to stop servicing ‘MIR’ cards, which will lead to the aforementioned problems. On the other hand, continuing to service these cards entails the risk of sanctions being applied to them.”
In his assessment, the cessation of “MIR” card servicing in Armenia could also negatively impact domestic trade:
“In 2022, around 130,000 repatriates arrived in Armenia. Now, most of them have returned to Russia or moved to other countries where conditions are better. The situation in Armenia will complicate money transfers and banking operations, which could lead to additional outflow of repatriates.”
