Elías Amor Bravo, Economist, 16 August 2023 — The Cuban communist regime is committed to advancing banking reform — the so-called “bankification” — and now they have gotten into advertising, promoting a campaign in which state banks offer a bonus of up to 6% to customers who pay for goods and services with cards or payment gateways. We will have to wait to see if this clear incentive has the intended result and if the authorities are willing to assume costs for its implementation.
The truth is that these publicity campaigns logically have a cost, and no one will have to account for the impact on the operation, so experimenting can be an opportunity to see if Cubans will use plastic money, as the regime wants, and stop using cash.
The 6% bonus is small, considering the high inflation that currently exists in Cuba, but it has its quantitative scope and in some cases could act as a mechanism of attraction for the realization of electronic payments in shops.
The advertising campaign is aimed at the three options that exist on the Island: mobile transfer for the online payment option through the QR code, Enzona; the option to scan a QR and TPC code; and POS to use a magnetic card. In addition, the bonus of commercial banks (Bandec, BPA and Metropolitan) benefits natural persons who pay electronically without distinction of the type of ownership of the establishment or entity that makes the sale.
Will this campaign yield results? It’s not easy to predict, but it must be taken into account that success will depend not only on the discount or bonus, but on other things that in the current reality of Cuba are essential for this to work.
And what will happen if the electronic payment is made and the dreaded daily blackout occurs?
The daily reports of the Cuban Electric Union [UNE] are still calamitous. On Monday the 14th, the service was again affected by a generation capacity deficit from 7:45 p.m., although it was reportedly restored at 1:39 a.m. on Tuesday the 15th.
The electrical system continues to be affected by all kinds of events daily, some predictable and others less so, such as the unforeseen exit in the morning schedule of unit 5 of the CTE Nuevitas electrical plant and the non-recovery of fuel levels in the engines of the mobile generation of Melones and Regla, as well as the breakdown of the CTE Felton, the CTE Mariel and the CTE Renté, the latter under eternal maintenance.
The UNE continues to strictly comply with President Diaz-Canel’s order to report on the availability of the National Electrical System (SEN) every day and anticipate a possible lack of service, and people begin to get fed up because the problem still isn’t resolved, even when the whole system is in service.
That said, what could happen if a blackout occurs when making the electronic payment? What happens to bankification then, and what happens to the 6% advertising campaign? You have to think about everything so that when the “affectation” arrives due to the difference between the availability and the demand on the SEN, the customer who is going to make the electronic payment is not stuck halfway. That happens and can continue to happen.
And if upon making the electronic payment the network goes down or begins to work with the usual slowness, that would exasperate anyone.
The complaint of Cubans about the terrible services of the state telecommunications company ETECSA is providential, and if the basic services are affected by the cuts and control systems of the regime, the electronic transactions, somewhat more sophisticated, can end up creating a martyrdom of waiting for the seller and the buyer. Seen from this perspective, it may seem that the 6% incentive is too small.
And if when going to the store to buy the product, it turns out that the last unit has been sold and there is no guarantee of when the next one will arrive, even in an establishment that sells in MLC [hard currency], this is where the deficiencies begin to be distressing.
The lack of replenishment of State stores is a feature of Cuban commerce that is magnified by the shortage of foreign currency. The really necessary products are scarce, and this objective reality can be a hard blow to the bankification that the regime intends.
So in these three cases and their multiple combinations, the electronic purchase, no matter how much the bonus, cannot be made, and the consumer, disappointed, will be forced to postpone his decision.
What do you think he will do the next time he needs that product?
What he always does. He will take money from any ATM that he finds stocked, and he will go to the informal market where it will be easier for him to carry out the transaction and return home with what he needs.
You don’t have to be a commercial and marketing strategist to understand these processes. Electronic payment can work as an incentive, but other simultaneous conditions must happen for the desired operation to take place.
And then there is the timing for the launch of this incentive. In principle, barely two weeks, from August 15 to 30. Totally insufficient. But what do the authorities intend? Perhaps Cubans will be aware of these actions immediately and will be ready to carry out the operations.
Those who fear electronic means of payment do not need to buy anything, and this campaign does not interest them. Those who don’t have a means of payment, given the deadline and the shortages (plastic money is scarce because it has to be imported) also won’t have time before the 30th.
Who are the communist leaders fooling with these distasteful improvisations that strike a blow to the morale of a people who just want to be able to eat every day? Everything is very simple and at the same time contradictory. Banks, as state agents that don’t have to answer for the operating account, increase the bonus to 6% for customers who pay for goods and services through cards or payment gateways, but they do not estimate the cost that this can entail for their accounts, and what is worse, whether they will gain customers willing to continue with electronic payments.
It is an attempt to comply with the orders of the communist hierarchy, so that the regime sees that what they order is done. And it’s an embarrassing exercise that will end in absolute failure.
Translated by Regina Anavy
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