The Central Bank of Cuba Admits That the Country Is Not Ready for Electronic Payment

The Central Bank of Cuba admits that many of the Island’s ATMs are in poor condition. (14ymedio)

14ymedio bigger14ymedio, Havana, 24 January 2024 — The Central Bank of Cuba’s (BCC’s) report on the banking process was explained this Wednesday by Cubadebate. The conclusions are not optimistic: the country is not prepared to have electronic collection devices in all businesses, state and private.

The fiasco is even more visible in the case of the MSMEs (micro, small and medium-sized enterprises) and other private businesses, which have been perfecting strategies for months to avoid the obligation to deposit their money in the banks and pay taxes. In fact, they insist, the amount of cash circulating on the Island increased in 2023 compared to the previous year, although inflation is also responsible.

“The growth and emergence of new economic actors has led to more entities to deal with and more monetary circulation. At the same time, a greater number of people go to the bank to deposit and withdraw cash,” explains Cubadebate, but the intention to enable ATMs for the population has not had the desired effect, as banking institutions are not able to absorb the growing volume of transactions.

However, the report points out, at the end of 2023, the BCC noted a decrease in cash withdrawals and an increase in the use of electronic channels by 21.1% in December, compared to September. In the same period, 595,005 digital operations were carried out for a value of 1,745 million pesos. Likewise, at the end of the year, operations in accounts associated with payment cards that do not involve cash were 68.3% of the total, 4.9% more than a year earlier.

Of the 364,705 “economic actors” that exist in the country, only 67.8% have been trained

Cubadebate says that the government has implemented bonuses of 6% and 10% for each electronic operation carried out, depending on the service they pay, and has created an extra cash service – the possibility of extracting cash from a bank account in a state ration store. The government has also trained workers and companies in the implementation of digital payment systems, which has contributed to the greater use of that method. However, the media acknowledges, the efforts remain insufficient.

Of the 364,705 “economic actors” that exist in the country, only 67.8% have been trained, and every day new MSMEs arise (there are already about 10,000) that increase demand. There is no cash availability either, as most ATMs are in poor condition and banks are experiencing a serious shortage of employees. “Havana is feeling the largest impact, with a 26% turnover of workers,” the newspaper added.

In 2023, the National Assembly of People’s Power set up  commissions to evaluate the service in the banking and financial systems and found it deficient. The worst part, the report indicated, pertained to farmers and the elderly, who do not have the means or the time to get around the banking bureaucracy.

The farming cooperative sector is still not in a position to face banking at the level that the country need”

 The same conclusion was reached by Rafael Pridas La O, president of the National Association of Small Farmers in the municipality of Nueva Paz, in the province of Mayabeque: “The farming cooperative sector is still not in a position to face banking at the level that the country needs.” The main cause, in addition to the advanced age of many, he argues, is that most people have cell phones that are good at capturing coverage in precarious service areas but are not modern enough to make electronic payments.

Also, “it is difficult to leave the farm to spend the whole day lining up in a bank to withdraw cash, even more so with the critical situation of transport and the distance between the popular councils that make up the municipality. Today we have cooperatives with more than two million pesos in their accounts that can’t be withdrawn,” Pridas explained.

Also, with workers who charge up to 1,000 pesos per day and demand cash, “farmers need the money immediately,” he continued. The banks have tried to be flexible and allow withdrawals of up to 700,000 pesos if they are given advance notice, “but I have farmers with 50 workers who must be paid 50,000 pesos every day,” and what the bank allows you to take out, after expenses, makes it “tight,” he says.

Another problem is obtaining raw materials, or foreign exchange to buy them in the MSMEs, when sellers mostly want to be paid in cash. If farmers are pressured to pay with transfers, they will try to look for other ways to obtain physical money “by diverting goods to the black market, which would affect, among other things, the increase in the price of food,” Pridas explained.

There are economic actors who do not accept electronic payment, not even with low-denomination cash”

In everyday life, paying for food or services is not easy either. “There are economic actors who do not accept electronic payment, not even with low-denomination cash. Others keep the QR code out of sight of customers. Even in some ration stores they don’t know how to use the system and make excuses for not providing the service,” a habanera tells Cubadebate.

Other merchants simply refuse to pay for transfers or set differentiated prices, the cash payment being cheaper. Sending money to personal accounts and not to those of companies is another way for sellers to avoid paying taxes.

In the case of prepaid cards to buy fuel, says a customer, sometimes you arrive at the gas station and there is no connection. The long lines to acquire these cards are also a problem, he adds. “Iinstead of shortening the process, it takes longer.”

In a context in which even the sellers in state companies are reluctant to accept electronic payments, the conclusion of the report is clear: “The infrastructure does not yet have the development required by the process – especially in the interior of the country – and non-state economic actors do not have a formal market where they can acquire foreign currency, so they continue to accumulate cash and demand payment by that route from their customers.” However, banking “continues ahead.”

Translated by Regina Anavy


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