Cuba Has a New Unified Payment System
HAVANA TIMES — The option of purchasing products at hard currency stores in regular Cuban pesos (CUP) will be made available in commercial centers around Cuba this month as part of the government’s plan to re-establish a single-currency monetary system on the island.
The possibility of paying with CUP or combining these with Cuban Convertible Pesos (CUC) in cash or through debit cards will be offered by Cuba’s 28 largest shopping centers and by smaller establishments at a later date, with a view to having at least one major establishment employing this new system in each province by the end of May, Cuban commercial authorities told the press.
Since early March, the hard currency stores La Copa (operated by Cuba’s TRD corporation) and La Puntilla (part of the CIMEX branch) have begun to accept payments in CUP on an experimental basis, converting these payments into their equivalent in CUC by applying the official exchange rate of 1 CUC – 25 CUP.
CIMEX Commercial Vice-President Barbara Soto Sanchez and commercial expert Arturo Kautzmann Torres told Cuba’s Juventud Rebelde newspaper that the measure will be applied gradually across the country, and that its implementation will be regulated by the Implementation Commission tasked with supervising the economic reforms now underway.
“The process is making headway without any traumas and our work schedule allows us to implement the new system gradually, first in the food section and then in the entire stores, so as to allow customers to become familiarized with it,” Kautzmann said.
Officials added that product inventories kept by Cuban corporations continue to be entered into the books in CUC and that their bank accounts are in that currency. This requires a differential deposit of CUP incomes and new security measures to avoid any kind of financial crime.
In October of last year, the Cuban government announced it would set in motion a process to establish a single-currency monetary and exchange system in the country, one of the decisive steps taken as part of the reform process impelled by Raul Castro. No date has yet been set for so-called “Day Zero”, which will mark the disappearance of the CUC, but everything seems to indicate the measure will come into effect mid-year.
The report specified that registers at commercial establishments have already been programmed to calculate CUP – CUC equivalences on the basis of the official exchange, registering and detailing this transaction in the customer’s receipt.
A Temporary Solution
Kautzmann explained that keeping the CUC as the exchange referent is merely a “technical and practical solution.”
“This yet another payment facility, as the use of debit cards is. We shouldn’t however forget that it is a temporary measure. It makes no sense to spend money on larger or more sophisticated registers when we know we will be operating with a single currency soon, that the country is moving towards monetary unification,” the expert said.
As a security measure applied as part of this new measure, stores are periodically extracting the cash in their registers, so that employees do not have to handle large volumes of bills.
As for cards, all existing Cuban debit, wage, retirement or international mission cards, as well as some cards issued by foreign banks that do not face restrictions arising from the US embargo, will be accepted at stores.
Shortage of CUP
One of the difficulties faced in extending debit card payment mechanisms is the unavailability of debit modules at sales points, owing to their cost and the unstable telephone service that hinders communications.
Store employees will inform the customer of the product’s price in CUC. The customer will then decide whether they wish to pay in CUP, CUC or a combination of the two.
According to the figures quoted, in March La Puntilla took in 50,000 CUC. In the first week of April, it reported income of 25,000 CUP. Experts anticipate the CUP figures to quadruple as this new payment option becomes more popular.
Some independent reports are commenting on a growing shortage of CUP, brought about by the unchecked sale of CUC by the population.
Following the announcement of the monetary unification, Cuba’s money exchange system began to face a number of difficulties and several exchange locales have been forced to temporarily suspend their operations because of a lack of CUP.
7 thoughts on “Cuba Has a New Unified Payment System”
All of the above doesn’t change the central payment problem of all Cubans: where the get the money – CUC or CUP – to pay for the very expensive but essential goods in the TRD’s. A pension of 250 CUP is still 10 CUC, about 4 bottles of cooking oil.
Bottom line: the purchasing power of Cubans has not changed.
No, I do not know. But as the article above states, the rumour in Cuba is that the change will happen sometime his summer. Given that the track record on prognostications on anything related to Cuba is 0 for ten thousand, my tentative conclusion is that we can be 99% certain we have no f*cking idea.
I hope that helps?
I can’t tell you. Only when the Granma issues a notice declaring the end of the CUC will we know for sure how long it’s taken for the CUC to be abolished. But there’s no denying that the dual currency system was despised as some form of economic apartheid because it denied ordinary Cubans access to imported goods.
Re-read the article, approx. mid summer, don’t hold your breath but that’s the best guess so far.
Do you know how long it might be before CUC will not be accepted in Cuba?
There is some concern that sticker shock, that is to say when a pair of 80 cuc Adidas running shoes suddenly costs 2000 cup, that there will be a slowdown in purchasing. The other related issue is the direct comparison that surfaces more visibly between the average monthly salary of 250 cup and basic consumer items like shampoo, cooking oil, and cigarettes presently sold in cuc. Upon conversion, the high costs of these basics focuses more attention on how low current salaries really are.
It will certainly be an improvement to get rid of the dual currency. The system is a major source of distortion in the Cuban economy. Currency unification won’t fix everything, but it’s a start.
Interesting to note, the retailers mentioned in the article: La Puntilla & La Copa are owned by the Cuban military. CIMEX controls all import & expert, as well as La Puntilla stores and La Copa are under GAESA.
Raul Castro’s son-in-law, Gen. Luis Alberto Rodriguez, is the chief executive of GAESA, a holding company which also operates numerous foreign exchange businesses including the country’s largest tourism corporation and real estate firm, a chain of warehouses and hundreds of retail outlets selling everything from groceries to domestic appliances.
CIMEX runs its own shipping line and bank, clears foreign credit card transactions, controls remittance wire transfers, operates a real estate business and the country’s largest travel agency and owns more than 2,500 commercial outlets including department stores, fast food spots and gas stations. The director is Colonel Hector Oroza Busutin .
This is what Raul’s economic reforms are all about: regime preservation.
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