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Russia: Digital Payments and Western Sanctions

Categories : Cash and Crises, Cash does not require a technology infrastructure
March 21, 2022
Tags : Access to cash, Cash and Crises, Digital payments, Europe, Russia
Digital payments surpassed cash in Russia in 2018, and the central bank promoted them during the Covid-19 pandemic. Mobile and card payments operate with glitches since Western countries imposed sanctions following the invasion of Ukraine.
Manuel A. Bautista-González

Ph.D. in U.S. History, Columbia University in the City of New York

Post-Doctoral Researcher in Global Correspondent Banking, 1870-2000 – South America, University of Oxford

This post is also available in: Spanish

Cash v. Digital Payments, 2010-2021

According to the Bank of Russia (CBR), card payments thrived from the mid-2010s through 2020. Cash withdrawals surpassed digital transactions by volume until 2012 (Graph 1, panel A). By value, cash withdrawals were bigger than digital transactions until 2016 (Graph 1, panel B). Digital transactions increased in 2020 during the Covid-19 pandemic but fell by volume (-7.2%) and value (-5%) in 2021.

Graph 1. Russia: Cash Withdrawals and Digital Transactions by Volume (billions of transactions) and Value (RUR trillions), 2010-2021

A. Volume

B. Value

Note: Figures include cash withdrawals and digital (“cashless”) transactions with cards issued by Russian and foreign banks. Figures for 2021 exclude Q4. Source: CBR National Payment System statistics (“Key Indicators of the National Payment System (NPS) development”); CashEssentials.

According to the CBR, digital payments surpassed cash in Russia’s retail turnover in 2018 (see Graph 2).

Graph 2. Russia: Digital Payments (blue) and Cash (red) in Retail Turnover (percentages), 2014-2020

Source: CBR 2021: 9.

Debit cards dominate payment cards in Russia. Their number doubled between 2011 and 2021. (see Graph 3). Credit cards numbers increased until 2015 and have been stable since. Electronic point-of-sale terminals (POS) experienced double-digit growth rates between 2010 and 2020, but their number declined in 2021.

Graph 3. Russia: Payment Cards and Electronic Terminals (millions), 2011-2021

Source: CBR National Payment System statistics (“Key Indicators of the National Payment System (NPS) development”); CashEssentials.

Financial Inclusion in Russia

 According to the World Bank’s Global Findex Database, in 2017,

According to the World Bank’s World Development Indicators, in 2020,

Digital Payments and the Covid-19 Pandemic

The CBR promoted digital payments during the Covid-19 pandemic:

In 2020, there were 56 billion digital transactions in Russia, totalling 914.2 trillion roubles (RUR) and 27.2 billion contactless transactions, at RUR22.7 trillion (CBR 2021: 6, 7). The share of digital payments in retail turnover increased from 64.7% in 2019 to 70.3% in 2020.

Cyber thefts have increased too, rising to nearly RUR9.8 billion.

Do you Take Mir? 

In April 2014, Visa and Mastercard suspended operations in Russian-annexed territories in Ukraine. Shortly after, the CBR established the National Payment Card System (NPCS) and the Mir (“World”) card scheme, an alternative to Visa and Mastercard. Mir cards have grown in Russia, totalling 108.6 million in 2021. However, Mir cards are not accepted worldwide.

The CBR also launched the NPCS-based Faster Payments System in 2019 to enable Russians to “transfer funds to each other using mobile phone numbers, pay for purchases, pay utility bills,” among other transactions. The FPS slowed down on March 5 due to intensive DDoS attacks on telecom providers.

Western Sanctions Disrupt Card and Mobile Payments 

Mobile and card payments operate with glitches since Western countries imposed sanctions against Russia following the invasion of Ukraine.

On March 5, payment networks Visa, Mastercard, and American Express announced they would suspend operations in Russia. According to the Nilson Report, Visa and Mastercard cards accounted for 74% of payment transactions in Russia in 2020.

International money transfer firms including Western Union, Remitly Global, Wise, and WorldRemit Group have also suspended service, further isolating Russia’s financial system.

This post is also available in: Spanish

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