Reports from Cuba: Cadeca to issue prepaid cards in another step towards dollarization in Cuba

14yMedio reports from Havana via Translating Cuba:

Cadeca to Issue Pre-Paid Cards in Another Step Towards Dollarization in Cuba

Cash withdrawals using pre-paid debit cards will only be in Cuban pesos (CUP) and only through one bank’s ATM network.

Cuba’s state-run currency exchange company, Cadeca, has announced “a new service”: prepaid cards in dollars to be used exclusively within Cuba to pay for goods and services in the country’s hard-currency retail network. The new operation, which is not yet available, is an effort to take over cash remittance transfers from Western Union, which recently suspended operations in Cuba.

According to an advertisement shared on Facebook by Cadeca vice-president Alejandro Velazquez, the new prepaid cards will be issued exclusively by the Bank of Credit and Commerce (Bandec) in 200, 500 and 1,000 dollar amounts, though the state-owned company has yet to provide details.

As the ad notes, cash withdrawals can only be in Cuban pesos (CUP) and only through the bank’s ATM network. Withdrawals cannot be exchanged for foreign currency and the bank maintains it is not obliged to return any unused funds. It is not yet known when the cards will go into circulation.

Velasco also does not indicate where the cards will be available, if Cadeca and Bandec will be directly involved in their sale or issue, or if it will be possible to purchase them online from abroad as can now be done with rechargeable telephone debit cards issued of the state telecommunications monopoly Etecsa.

The new service could simplify the purchasing process for those who shop at the country’s hard currency stores, where customers must pay using a pre-paid debit card. Currently, consumers are required to use a card issued by a foreign bank or one obtained by opening a foreign currency account at a Cuban bank, a process that could take weeks.

The Cuban government has set the currency exchange rate at 24 pesos to the dollar — the unofficial rate is at 600 and rising — making it virtually impossible to buy dollars through official channels.

On May 20 Cuban airports abruptly stopped selling hard currency without prior warning. The news came via a message on social media posted by Cadeca a few hours before the decision took effect.

The company claimed that the drop in tourism due to the pandemic resulted in a “significant shortage” of hard currency, adding that, though it had been able to operate normally up to that point, the lack of liquidity had reached an unsustainable level.

The government is now taking drastic action in an all-out quest to obtain hard currency. One indiction of this is the many neighborhood stores that no longer sell merchandise in pesos and will only accept payment in foreign currency, a dollarization of the Cuban economy that is spreading throughout the country.

The number of these state-run stores is growing by the day. The transition is causing consternation among the buying public, who see the change as a sign of economic instability and monetary discrimination. Nevertheless, authorities remain undeterred in their efforts to obtain foreign reserves at any cost.

As of June 5, Cuban residents who who return home through airports at the country’s two international resort hotspots, Ciego de Ávila and Varadero, will have to pay in hard currency for a mandatory one-week hotel quarantine package. Among the reasons given by health authorities is “the need to reduce costs associated with fighting the pandemic.”

1 thought on “Reports from Cuba: Cadeca to issue prepaid cards in another step towards dollarization in Cuba”

  1. Regardless of the details, this is all about improving Castro, Inc.’s revenue $tream. Obviously, the money will come from the “diaspora,” and everything about the process will be calculated to benefit Castro, Inc.

    Anybody who’s Cuban knows all this perfectly well, but the “diaspora” will go along with it anyway.

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