(Reuters) - Russia is turning to microchip manufactures in China to circumvent western sanctions which have boosted demand for bank cards linked to the Mir payment system, an executive with the domestic payment system said.
Western sanctions imposed on Russia over its invasion of Ukraine have cut Moscow off the global financial system and from nearly half of its $640 billion in gold and foreign exchange reserves.
Oleg Tishakov, a board member with the National Card Payment System (NSPK), said Russia is facing a shortage of microchips as Asian manufactures suspend production amid a coronavirus pandemic and European suppliers have stopped cooperating with Moscow following sanctions.
"We are looking for new microchip suppliers and [have] found a couple in China, with certification process ongoing," Tishakov told a conference on Tuesday, without giving further details.
Some of Russia's biggest banks no longer have access to the SWIFT global banking messaging system, and international payment cards Visa (NYSE:V) and MasterCard have stopped servicing Russian accounts abroad. Mir's connection to Apple (NASDAQ:AAPL) Pay was removed last month.
NSPK issued over 2 million Mir cards between the end of 2021 and March, according to Reuters calculations based on the system's data, with total cards outstanding now at 116 million.
All major Russian banks have reported an increased demand for the domestic card, which some now issue in a co-brand with China's UnionPay, an alternative payment system to Visa and MasterCard for purchases by Russians abroad.
Mir cards are also accepted by some banks in Turkey, Vietnam, Armenia, Uzbekistan, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan and Georgia breakaway regions of South Ossetia and Abkhazia.