EghtesadOnline: The much-touted scheme to integrate the payment systems of Iran and Russia has been slowed in the past couple of months due to lengthy negotiations, the head of Central Bank of Iran’s Payment Systems Department announced.
“However, Russia is still Iran’s major partner for bank card integration and there have been significant improvements on the technical front,” Davoud Mohammad Beigi was also quoted as saying by IBENA.
CBI officials had first announced in mid-May that Iran and Russia have agreed to integrate their bank card systems and the plan would come on stream by Aug. 22.
Back then, during a meeting held on the sidelines of the Fifth Conference of Iran-Russia Banking Task Groups, a memorandum of understanding for development of mutual banking ties was signed by the two countries, Financial Tribune reported.
Since then, Iranian officials have announced several more dates by which the scheme would be supposedly implemented, the latest of which was Dec. 10 mentioned by CBI Governor Valiollah Seif.
In his latest remarks, Mohammad Beigi noted that the integration process should have been concluded by December, but due to legal obstacles, the Russian side does not agree to make the system operational unless the respective central banks sign another agreement to address the obstacles.
“Security and business standards are Iran’s major issues in establishing international ties,” he added.
The official noted that despite all the advances made in the Iranian digital banking sector, many banks are facing issues while complying with international standards since they were isolated during the long years of nuclear sanctions.
Russia has a nationwide payment network as does Iran and given the geopolitical implications and importance of bilateral ties, the development of mutual banking ties is a crucial requirement.
The Interbank Information Transfer Network, known as Shetab, is the Iranian national interbank network established in 2002 for creating a uniform backbone for the Iranian banking system. All banks have since been connected to it.
The Russian national payment system called Mir, which translates as “World” or “Peace”, was created on July 23, 2014, with the goal of reducing risk of further financial sanctions by the West and cut reliance on western systems, such as Visa and MasterCard.
The Russian national payment system’s main objectives are setting up a reliable money transfer service by using national payment instruments, building trust in cashless means of payment, creating Russian sovereign payment areas independent of foreign companies and promoting Mir national payments cards in the international market.
According to Beigi, the currency of Iranians’ bank accounts will not change for use in Russia, but the system will automatically calculate the equivalent price in rial.
“The system works the same way for Russians but they can only use their magnetic cards in Iran, not their smart bank cards,” he added.
As CBI points out in its statement, the integration of Iran-Russia bank cards will help develop tourism facilities throughout Iran for Russian tourists and other countries with “common interests” while easing the travel of Iranian tourists to Russia.
Integrating Iranian bank cards with those of foreign nations was on CBI’s agenda as soon as the nuclear accord, dubbed the Joint Comprehensive Plan of Action, was implemented on Jan. 16, 2016.