14ymedio, Madrid, 20 September 2023 — It has been a month and a half since a series of measures referred to as bancarización took effect and opinion on the street remains unchanged. This government effort is intended to encourage businesspeople and consumers to use electronic payment options rather than cash. “I don’t understand how it works. For small purchases, it doesn’t make sense” says Luis, a retiree. He was one of several Havana residents interviewed for an article published on Wednesday by Cubadebate, a state-run news website which sampled public opinion on the issue. The responses suggest officials have a long way to go in selling the public on this new way of doing business.
“The Cuban economy does not currently have all the cash resources it needs to operate or to meet public demand,” the article concludes. “One of the the expected benefits of bancarización, therefore, is a gradual decrease in the amount of cash in circulation, which is very expensive to print, transport and handle.”
This is the goal but it has run up against reality in way that even many government supporters had warned would be an issue. Cuba’s private sector operates on a cash basis as the article acknowledges. “I currently spend around 50,000 pesos on soft drinks but my supplier doesn’t take electronic payments. It’s a big hassle for him to withdraw the money in cash and exchange it for the hard currency he needs,” explains Raul León, the manager of a Havana cafe. He himself has no problem billing customers electronically but he cannot replenish his stock of supplies without banknotes.
Business owners who rely on imports must buy foreign currency on the black market due to the few options available to acquire it legally
The article also acknowledges that business owners who rely on imports must buy foreign currency on the black market “due to the few options available to acquire it legally.” Additionally, businesses are not allowed to withdraw more than 5,000 pesos from their bank accounts at a time. It’s a bit like a dog chasing its tail. There is a nationwide cash shortage so business owners are reluctant to deposit their cash in banks because they need it to buy dollars, which then further decreases the amount of cash in circulation.
Cubadebate looked at individual cases that put a human face to the public’s resistance to the new banking measures. There is Luis, the retiree quoted at the beginning of the article, who gets up early and goes to several ATMs in search of his 1,500-peso pension and who needs someone’s help to make a withdrawal. There’s Gladys, who spent two days waiting in line to get the money she needed to pay for a refrigerator on the informal market because the ATMs did not have enough cash. And Carlos, who lost an afternoon of work due to problems withdrawing money from an ATM that kept breaking down as soon as it was fixed.
According to officials, 70% of domestic retail businesses already use electronic payment systems, but not all them. Cubadebate visited a neighborhood grocery in Playa, a suburb of Havana, where customers can only pay with cash. Meanwhile, a supermarket in Cubanacán has been offering an electronic payment option for some time now.
“Most of our customers are older adults. Many of them don’t have a cell phone or don’t feel comfortable paying for things electronically because they’ve always used cash. We’ve told them about the advantages of using a QR code, such as the 6% discount. They would save some money and we wouldn’t have to take so much cash to the bank. But, unfortunately, most of them aren’t interested,” explains the manager.
He also points out that the Ministry of Trade now requires that four or five electronic transactions be executed each day. In all their public appearances, officials have taken pains to emphasize that, though businesses had to provide and promote electronic payment options, customers were free to use them or not. “I’m not happy that they want to question me about something that is beyond my control,” he protests.
Customers will be required to pay by card at gas stations beginning in late October but 100% of those interviewed by Cubadebate said they still planned to pay with cash
Beginning in late October, customers at gas stations will be required to pay by card but that will be difficult to pull off. Cubadebate visited a station in Playa where 100% of the customers it interviewed said they still planned to pay with cash.
Cubadebate seems surprised by a problem that was widely foreseen by both the independent press and the public-at-large: the lack of connectivity that prevents transactions from being completed at point-of-sale terminals. To illustrate this, it cited the comments of one of it own readers who had purchased a phone with a card. Though the amount was deducted from his bank account, the saleswoman insisted he pay with cash because the transaction had not gone through.
Cubadebate insists that, even with all the problems — most have occured in Havana, the most technologically advanced province in the country — electronic payment systerms are needed to alleviate the nation’s cash shortage and shrink the black market. Furthermore, it argues that society is already moving in this direction and that the digital transformation of the economy will ultimately happen one way or another.
Raúl León, the cafe owner who could use more cash to run his business properly, sums up the private sector’s situation well. “It is a convenient and effective solution for those who can adapt to the technological changes that it requires,” he says but adds that it does not address one of the main issues for people like him: paying suppliers. A serious problem in a country where the state lacks the resources to do something as basic as feed its population.
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