How external pressure and sanctions boosted FinTech innovation in Russia


My husband and I moved from Russia to the United States a year ago, and every time I talk to my American friends, they are excited to learn more about my home country. To many, Russia is an interesting, different, and distant world. The stories told are mostly anecdotes, but there is so much left to be shared. What is the real Russia? How has the country responded to sanctions and external pressure in recent years? Has there been room for innovation? Before coming to the US, I was working as an analyst at Accenture and subsequently for the Central Bank of Russia on one of the most unique and nationally important projects in the payments industry — and therefore, to address some of these intellectually intriguing questions, I would like to tell you a story straight from the horse’s mouth.

After the collapse of the Soviet Union in 1991, Russia, a new country, started to imbibe ideas of the “Western world” with thirst and readily accepted innovations. Russia adapted these ideas for the particularities of the local market and eventually developed its own path, different from the rest of the Western world. For example, the Russian payment card market is characterized by the prevalence of debit card products, which make up 88.3% of all payment cards issued, whereas in many western countries the proportion of credit cards is higher. A fairly significant portion of the population in Russia (~20% of its 147 million people) still do not have bank accounts. In the US, by contrast, only 7% of the population is unbanked. Historically, Western countries developed far more rapidly than did Russia; however, this position as an “outsider” has turned Russia into a land of opportunity, through which it has leveraged existing human capital and the collective experiences of other countries to build companies, products, and services more efficiently.

In March 2014, Crimea became a part of Russia and the future was on the cusp of change. Sanctions were imposed on Russia by the world’s leading governments, leading to a domino effect on multiple industries. International payment systems, like Visa and MasterCard, announced that they would stop processing transactions for several Russian banks in response to the global move towards sanctions. This caused a situation of bewilderment in the Russian financial services market — fears were that Russia would be excluded from the international payment community and its citizens would be unable to use financial instruments. To protect the Russian financial services market, the Central Bank of Russia created a national payment system to process the transactions of Russian citizens in lieu of Visa, MasterCard and other international payment systems. The success of this project was of national importance for the country as it gave rise to innovative changes in the industry. This project marked the development of Russia’s domestic payment services, creating an independent “homegrown” payment system called “MIR”.

Headquarters of the Russian National Payment Card System

These changes altered the structure of Russian payment card market. Previously, MasterCard was the leader with 49.4% market share, followed by Visa with 44.7%. The rest of the market was distributed among other international payment systems (Diners Club, American Express, JCB, UnionPay, etc). The situation has evolved quite drastically with Russia’s payment system or “MIR” accounting for 17% of market share, while Visa now holds 40% and MasterCard — 36% of the Russian payment card market. According to the Central Bank’s estimates, the market share of “MIR” card will reach 35–40% in the next couple of years. One of the main reasons for this rapid growth was a new federal law that was issued in early 2018, obliging all welfare payments to be processed via “MIR”.

“MIR” card issued by Sberbank

“MIR” is indeed developing rapidly; in three years it achieved the results that international payment systems were working on for decades. An infrastructure that can process ~ 30 million transactions daily was built in just a year. As of June 2018, 37 million “MIR” cards were issued. The company also became one of the most prominent players on Russian FinTech market, serving as a “hub” for a number of innovative projects. Below is a selection of the company’s key milestones over the years, to provide a better understanding of its impact on the Russian FinTech industry:

2016: ”MIR” sets a goal to improve client experience, launching a unique client loyalty program for its cardholders. The program has thousands of offers from merchants all over Russia, with cash back up to 20%. The program is working with top retailers across Russia (including but not limited to gas stations, restaurants, grocery stores, etc.)

2017: “MIR” credit card develops a proprietary contactless technology that was later used in partnership with Samsung Pay. This not only fostered contactless payments with “MIR” cards, but also made possible mobile payments on electronic devices via NFC technology.

Data analytics center at the National Payment Card System

2017: Together with Tinkoff bank (a prominent player in the Russian FinTech market), “MIR” begins testing a new service that will parse consumer receipts to provide data analytics. Consumers will receive detailed reports on their purchase history, and banks will receive valuable data that can be used for marketing purposes.

2018: “MIR” announces a joint initiative with the Russian FinTech Association. The platform of instant money transfers (“Faster payments”) will go-live in January 2019. This platform will enable money transfers between businesses and consumers of the same and different banks (both C2C and B2B) by phone number, e-mail address, and via messengers and social media.

With the case of “MIR”, it is clear to see that innovation can thrive not only in free and entrepreneurial environments, but also under pressure and in isolation from the rest of the developed world. Although reading the tea-leaves about future is hard, the scope of the company’s announced projects places high expectations on the further growth of the industry, and shows the government’s primary focus on growing expertise and developing proprietary financial technologies in Russia.


1. National Payment Card System official web-site

2. Client loyalty program official web-site

3. Number of credit institutions in Russia

4. Statistics on types of payment card products in Russia

5. Faster payments

6. Market share of MIR, Visa, MasterCard, etc. in Russia

7. NSPK history and client loyalty program

8. Images :

How external pressure and sanctions boosted FinTech innovation in Russia