Digital ruble may slow growth of Russia's MIR cards

An analyst has warned that Russia’s upcoming digital ruble could undermine the country’s own card payment system rather than foreign competitors.

Natalia Milchakova, a senior analyst at Freedom Finance Global, said the central bank digital currency would become a direct rival to domestic card networks.

The launch of the digital ruble will slow the growth of the Russian bank card market by 7% to 9% per year.

Natalia Milchakova said.

Russia is preparing to roll out the digital ruble nationwide in September, marking a major shift in its payments landscape.

The MIR card system, launched in 2014, was designed as a domestic alternative to Visa and Mastercard amid Western sanctions.

Adoption of MIR accelerated after public sector employers were required to pay wages through the system.

Banks are now mandated to issue MIR cards to pensioners, civil servants, public employees and welfare recipients.

Around 475 million bank cards were issued in Russia last year, representing annual growth of about 17%.

The National Payment Card System reported that MIR transactions have exceeded $1.2 trillion over the past decade.

MIR currently accounts for roughly 80% of Russia’s payments market following the exit of Visa and Mastercard in 2022.

Even if foreign players return, they will no longer be able to retake a leading position in the Russian market.

Natalia Milchakova said.

Milchakova added that QR code payments and biometric technologies are also increasing competition in cashless payments.

These alternative fintech solutions may already represent up to a quarter of daily point-of-sale transactions in Russia.

Government and fintech solutions will have the greatest impact on the cashless payments market in the medium term.

Natalia Milchakova said.

The central bank has previously forecast that the digital ruble could account for 5% of total payments by 2032.