Russia and Iran continue to work on the integration of Russia's Mir payment system with Iran's Shetab through specialized agencies, the director of the Economic Cooperation Department of the Russian Foreign Ministry, Dmitry Birichevsky, told RIA Novosti.
"Russia prioritizes financial and banking cooperation with Iran, given our common focus on ensuring the sustainability of the bilateral payment and settlement infrastructure, independent of intermediaries from third countries. Work on the creation of a sustainable payment and settlement infrastructure is continuing through relevant agencies," he said in an interview with the agency last week.
In May 2022 Iran and Russia, having agreed to switch to mutual settlements in national currencies, discussed the connection of their payment systems - Mir and Shetab.
The Russian national payment system Mir, which translates as "World" or "Peace", was created in July 2014 with the goal of reducing risk from further financial sanctions by the West and cut reliance on western systems, such as Visa and MasterCard.
At the end of January, representatives of the central banks of the two countries signed an agreement to work on simplifying financial and banking operations. According to governor of the Central Bank of Iran, Mohammad Reza Farzin, the CBI’s financial messaging system merged with SEPAM (System for Electronic Payments Messaging) of the CBI.
Per the deal, 52 branches of Iranian banks and four unnamed foreign banks will use Iran's local interbank telecom system, known as SEPAM, to connect with 106 banks using Russia's System for Transfer of Financial Messages or SPFS.
Iran's Bank Shahr and Russia's VTB Bank will be involved in the related pilot program and other lenders will join gradually.
The need to unite the payment systems of the two countries emerged in 2018, when Iran was disconnected from the SWIFT international transfer system. And in June 2022, due to the war in Ukraine, a number of Russian banks, such as Sberbank and VTB, were also disconnected from SWIFT.
A Rival to SWIFT
Last summer, the financial system in Iran prepared infrastructure to join the Mir system. But after sanctions were announced on Russia for invading Ukraine in February that cut off Russian bank access to SWIFT, the two sides decided to focus on creating a rival to SWIFT for cross-border payments.
Russia’s second largest bank, VTB, launched a new service allowing both individuals and businesses to transfer money to and from Iran, the lender said, RT reported earlier.
State-owned VTB, which has been subject to sweeping western sanctions since last February, has become the first lender to provide banking services to Iran, which is saddled with some of the toughest international banking/monetary restrictions for decades thanks to Washington’s belligerence.
The bank’s vice president, Denis Valvachyov, believes that such transactions will be in high demand and that the move will strengthen economic cooperation and boost tourism between the two sides, the news outlet said.
The new service will allow money to be sent between Russia and Iran using account details within a day. VTB is planning to expand transaction services with so-called ‘friendly’ nations, a classification describing those that have not imposed sanctions on Russia.
The two countries are also working to ditch the dollar in their bilateral trade transactions. Trade between Russia and Iran surged by 15% last year, reaching $4.6 billion, Vyacheslav Volodin, the speaker of the State Duma, said at a government meeting.
According to the senior lawmaker, the two countries are actively taking steps to build mutual trade, which is “extremely important in the conditions of sanctions pressure on our countries.”
