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The key issue appears to be Iran’s payments process. It uses the ‘swiping’ method combined with PIN codes, whereas the Russian process uses the far more international ‘chip and PIN’ approach.
So far, only a handful of Iranian banks have invested in chip and pin technology. They include Bank Shahr “City Bank” and Bank Mellat. Iranian retailers, meanwhile, still have little knowledge of the system.
"The Russians believe that as banking cards in Iran are mostly magnetic and less secure than Russian cards, in the event of counterfeit cards, Iran will suffer the damage, and thus have to pay the costs,” Abutaleb Najafi, the director of Iranian Informatics Services Company, was quoted as saying.
8.1.6 Bank news
Iran’s Parsian Bank to open five more branches in Iraq
Digital payments in Iran up 27% in fifth Persian month
Parsian Bank, one of Iran’s leading private banks, has announced it is planning to open five branches in Iraq, Tasnim News Agency reported on September 30.
Parsian, which has two existing branches in the country, said each new branch would be backed with initial operating capital of $50mn.
Parsian CEO Kourosh Parvizian announced the planned new branches at a meeting of the Iran-Iraq Joint Chamber of Commerce on September 28.
He added that Iran’s private banks and credit institutions were prepared to provide financing for Iranian technical and engineering projects in Iraq. Parsian is the latest of several Iranian financial institutions that have moved ahead with Iraq plans.
Back in 2017, Bank Melli Iran, the second oldest Iranian financial institution, opened its first branch in the holy city of Najaf to deal with the thousands of pilgrims who visit from Iran annually.
With Iranians struggling to get hold of foreign currency inside Iran due to financial restrictions brought in amid the economic disruption caused by US sanctions, the bank found a market opening in providing foreign exchange services at the tourist destination.
Despite the heavy US sanctions imposed on Iran, Iranian trade with Iraq has continued apace. Some of it, such as the export of electricity and gas to the Iraqis, is accepted by the US Trump administration. Around 1,400 MW of power and 28mn cubic metres of gas that arrive in Iraq from Iran annually is indispensable to the Iraqis for want of alternatives. Iran uses money earned from these exports to purchase goods in or via Iraq.
Iraq remains the biggest buyer of Iranian products both on the official and unofficial markets, while Iran uses Iraq as a workaround for different products it desires to import but cannot bring in directly because of sanctions.
Re-exports to Iran from Iraq have long been used to make available to Iranians items such as Kia, Hyundai and Samsung products.
The Central Bank of Iraq, meanwhile, pays lip service to Washington with moves such as the banning of the export of dollars to Iran.
Iranians are using domestically developed digital payment methods more than ever. Growth in the use of such methods was reportedly up 26.79% y/y and 10.64% m/m in the fifth Persian calendar month (ended August 22), according to Tehran’s Financial Tribune.
Iranian banking authorities, which are unable to develop usual links to international payment gateways given US sanctions, have developed the Shaparak system. Introduced over a decade ago, it has helped card payment terminal, mobile phone and online payments take off in Iran.
Inflationary pressure in Iran brought about by the American sanctions regime
39 IRAN Country Report November 2019 www.intellinews.com
