India, Russia in ‘active discussion’ over RuPay & MIR mutual transactions

This will make RuPay one of the few international payment systems to be active in Russia. Moscow has faced a number of sanctions by Western countries since the war with Ukraine.

Flags of Russia & India | Representational image | X\@RusEmbIndia

New Delhi: In a significant move, India and Russia are in negotiation over the use of their respective payment systems, RuPay and MIR, in both countries, as Moscow continues to face Western sanctions over its banking systems since the start of the war with Ukraine in February 2022.

The MIR payments system is owned by a subsidiary of the Central Bank of Russia and was first envisioned as a replacement for Visa and Mastercard following Moscow’s invasion of Crimea in 2014. China’s UnionPay is among the few systems operational in the country.

In an interview to state-run journal “International Affairs”, India’s ambassador to Russia Vinay Kumar said last week: “The issue of accepting Russian MIR banking cards in India is under active discussion, with prospects for resolution appearing positive. Indian diplomatic and commercial missions are facilitating negotiations between India and Russia to establish mutual acceptance of the MIR payment system alongside India’s RuPay cards.”

Kumar added: “Recent meetings, including those of the IRIGC-TEC (India-Russia Inter-Governmental Commission on Trade, Economic, Scientific, Technological and Cultural Cooperation) have focused on creating a framework for this collaboration. If successful, this would enable seamless transactions for Russian visitors in India and vice versa, thereby easing the limitations imposed by Western sanctions on Russian financial systems.”

Since the start of the war with Ukraine in 2022, Russia has faced sanctions from the US and the European Union (EU), including the suspension of services by Visa and Mastercard, which saw the number of MIR-branded cards increase in the country.

However, the MIR payments system is not yet accepted in India and any such deal would be important for Russians travelling here.

The statement by the Indian ambassador is important since Russian President Vladimir Putin is scheduled to visit India this year for the annual India-Russia summit.

Prime Minister Narendra Modi travelled to Russia last July for the annual summit and invited Putin to visit India, which he accepted. The Chairman of the Russian State Duma (the lower house in Russia) Vyacheslav Volodin is currently in India for an official visit. Volodin was welcomed by Lok Sabha speaker Om Birla during his visit to the Indian Parliament on Monday morning.

Any MIR deal in India may face Western scrutiny 

As Russians faced difficulties with international payments, China’s UnionPay continued to remain operational in the country. However, in the last year, the US has threatened to sanction foreign financial institutions connected to Russia’s MIR payments system or its own financial messaging network SPFS – both of which were created as alternatives to Western-led international financial architecture.

“OFAC (Office of Foreign Assets Control) is targeting Russia’s core financial infrastructure, including the operator of the Mir National Payment System and Russian banks, investment firms, and financial technology (fintech) companies, to further implement G7 commitments to curtail Russia’s use of the international financial system to further its war against Ukraine,” said the US Treasury Department in a statement last February.

Last February, the US sanctioned the National Payment Card System Joint Stock Company (NSPK), the state-owned operator of the MIR payments system. The US Treasury Department said through the MIR payment system, Russia has been able to “build out financial infrastructure” to circumvent international sanctions.

In November 2024, the US Treasury department further warned foreign financial institutions of sanctions if they joined the System for Transfer of Financial Messages (SPFS), a Russian built alternative to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network.

The use of SPFS has allowed Russian banks to maintain international financial connectivity and a number of Iranian banks, which have faced Western sanctions, have joined the financial telecommunication network.

“OFAC views joining SPFS after publication of this alert as a red flag and is prepared to more aggressively target foreign financial institutions that take such action,” said the statement by the US Treasury department.

(Edited by Tikli Basu)