Turkish banks Isbank and Denizbank said on Monday September 19 that they were suspending the use of Russian MIR bank cards, following a warning from the US Treasury. In August, President Recep Tayyip Erdogan expressed his satisfaction that Turkish banks were opening up further to the Russian payment card network.
Using the MIR payment system to circumvent US sanctions
As soon as the Russian invasion of Ukraine began, American payment giants American Express, Mastercard and Visa suspended their operations in Russia. The bank cards of these 3 companies issued abroad no longer function in Russia, and Russian cards can no longer be used outside the country.
In response, Russian banks have switched to the MIR payment system, as well as to UnionPay, the Chinese payment system. In 2016, there were just 1.76 million MIR cards in circulation, compared with 125 million as of April 1, 2022.
A total of ten foreign countries accept MIR bankcards, including Turkey. In 2019, Isbank became the first Turkish bank to open up to this payment system, with the aim of attracting Russian tourists.
By the first half of 2022, only 1.45 million Russian tourists had visited Turkey, half the number in 2019. To bolster the country's already fragile economy, several Turkish banks have decided to align themselves with Isbank, and also accept MIR bank cards.
However, as early as the end of June, the US Treasury warned Turkey against circumventing Western sanctions against Russia.
A reminder from the Office of Foreign Assets Control
On Thursday September 15, the Office of Foreign Assets Control (OFAC), part of the U.S. Treasury Department, reiterated its warning to financial institutions wishing to extend existing agreements with card operator MIR, or to enter into new ones.
The use of the MIR bank card network outside Russia could, according to the US Treasury, enable Moscow to evade US sanctions.
The reaction from Turkish banks was swift: just a few days after the warning from the US authorities, two of the country's five banks authorizing payments with Russian MIR cards announced that they were backing down.
Isbank said it was suspending the use of the MIR bankcard network while it assessed the consequences of the US Treasury's statements, while Denizbank merely announced the suspension without specifying the reasons.
The three other Turkish banks concerned - Ziraat, Vakifbank and Halkbank - continue to use the Russian payment system.