Armenian Banks To Block Russian Credit Cards After U.S. Sanctions
Virtually all Armenian banks have decided to stop processing payments via Russian Mir cards following sanctions imposed by the United States on Russia’s National Card Payment System (NSPK) last month.
The cards issued by the NSPK became an alternative for Russian travellers in March 2022 when Visa and MasterCard shut off their Russian networks over Moscow’s invasion of Ukraine. The Mir system has been widely used by Russian tourists and expats in Armenia since then.
The NSPK announced on Tuesday that it was officially notified that 17 of Armenia’s 18 commercial banks will stop servicing Mir cards through the domestic payments system ArCa from March 30. It said that only the local subsidiary of Russia’s VTB bank will continue to carry out transactions with them from its 53 branches and over 190 ATM machines across the South Caucasus country as well as online banking platforms.
The Central Bank of Armenia insisted that the other banks made the decisions to ditch Mir cards independently. The Union of Armenian Banks attributed the decisions to “the risk of secondary sanctions.”
“These risks arose when the US Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against the Mir payment system,” the union told the Russian Sputnik news agency.
The OFAC said in February that Russia has been using the system to evade the sweeping Western sanctions.
Armenian entrepreneurs have cashed in on the sanctions, re-exporting second-hand cars, consumer electronics and other goods manufactured in Western countries and their allies to Russia. This explains why Armenia’s exports to Russia tripled in 2022 and doubled in January-August 2023.
A resulting dramatic increase in cash flows from Russia has also greatly benefited Armenian banks. They tripled their combined profits to a record 253 billion drams ($626 million) in 2022. The figure fell slightly in 2023.
