US MasterCard Gets OK for Use in Cuba as of March 1st
HAVANA TIMES – The first step in the thaw in financial transactions with Cuba has come from the MasterCard credit card company, reported Café Fuerte.
Starting on March 1, MasterCard credit and debit cards issued in the United States may be used in Cuba, ending one aspect of the blockade on financial transactions imposed by the US Treasury Department.
“Today, MasterCard announces that it will remove the current blockade on Cuba transactions of its cards issued in the United States as of March 1,” said a statement issued on Friday by the company, based in New York. “MasterCard will work with users of their cards issued in the United States to support their activities and decisions in Cuba.”
The firm suggested to its clients that “before traveling to Cuba to contact their banks to ensure that the cards will be accepted on the island.”
“This will represent a considerable inflow of money to Cuba,” said Emilio Morales, president of the Havana Consulting Group in Miami. “We will see many Miami Cubans spending on credit which in other times they could not.”
Morales said the state business network of restaurants and hotels stands the most to gain from the opening, since it has the necessary technology for accepting credit cards, something the private restaurants and Casa Particular homestays do not.
Anticipating travelers
The decision was adopted following the provisions put in force by the Treasury Department on January 16 to allow US institutions to open and maintain regular accounts with financial institutions in Cuba and process transactions by credit and debit cards for travel and other authorized operations on the island.
The easing of banking restrictions is one of the measures promoted by the new policy toward Cuba that President Barack Obama announced on December 17, 2014.
It is expected that the authorization of banking between the two countries will improve the speed and efficiency of authorized payments at a time when the number of travelers from the US to the island could skyrocket.
For now, Visa, the main competitor of MasterCard, has not said whether it will entitle its customers to use their cards in Cuba.
MasterCard said that its US-issued cards remain blocked for use in North Korea. In the case of Iran, Syria and Sudan, three countries that accompany Cuba on the list of countries the US government says support terrorism, no MasterCard card can be used, regardless of where it was issued, anywhere in the world.
Glass half-full, allowing MasterCard charges will increase tourist spending at Castro-owned hotels, bars, and restaurants. Glass half-empty, not likely to mean significant NEW spending, mostly spending replacing the cash currently being spent with credit purchases. The reality is that the economic reforms necessary to save Cuba must come quickly and in bigger chunks. The dribs and drabs currently in play sound good and but won’t generate enough new revenues fast enough to make a difference between now and 2018 when Raul steps down. The Cuban economy is likely to grow at less than 1% in 2015 matching the 0.6% achieved in 2014. The Castros will have to spend nearly $2 billion to buy food to feed the Cuban people. This means more than 85% of total food consumed will be imported. Even with MasterCard to the rescue, these moribund economic markers are not likely to be reversed any time soon.