Florida bank issues first US credit card for use in Cuba

Florida bank issues first US credit card for use in Cuba

A small Florida bank will issue the first U.S. credit card intended for
use in Cuba and make it easier for Americans to travel and work on an
island largely cut off from the U.S. financial system, the bank
announced Tuesday.
BY MICHAEL WEISSENSTEIN
Associated Press

HAVANA
A small Florida bank will issue the first U.S. credit card intended for
use in Cuba and make it easier for Americans to travel and work on an
island largely cut off from the U.S. financial system, the bank
announced Tuesday.

Pompano Beach-based Stonegate Bank said its Mastercard, available
Wednesday, will let U.S. travelers charge purchases at state-run
businesses and a handful of private ones, mostly high-end private
restaurants equipped with point-of-sale devices. Until now, Americans
have generally had to bring cash to Cuba and change it either at state
institutions that impose a 10 percent penalty on the dollar or in
informal exchanges with locals.

"This is going to be huge for American companies trying to do business
down here," Stonegate president David Seleski said.

The card's utility will be limited for the moment, however. Cuba is
preventing cardholders from using them for cash advances. And while the
bank says there are 10,000 point-of-sale devices across the island,
cashiers in state-owned stores often say they are out of service.

The 54-year-old U.S. trade embargo has barred nearly all U.S. financial
transactions with Cuba, including direct bank transfers and the use of
American debit and credit cards on the island.

A series of exemptions carved out by President Barack Obama after the
declaration of detente with Cuba in Dec. 2014 allows American companies
to unblock debit and credit card use and open direct links to Cuban
banks that permit financial transfers between the two countries.

Stonegate opened an account for the Cuban government and last year
became the first institution to issue a U.S. debit card for use in Cuba.
The bank says the debit card allows point-of-sale purchases and was
briefly authorized for ATM withdrawals before Cuba shut down that
capability in order to implement new security measures.

About 100 American individuals and businesses have opened Stonegate
accounts with debit cards approved for Cuba, nearly half of them
education institutions and travel companies that organize hundreds of
trips a year to the island.

The Cuban government is exempting the cards from the 10 percent
government penalty on dollar transactions, making them the cheapest
legal way for travelers to move dollars to the island.

Cubans receive hundreds of millions of dollars a year in remittances
from relatives living in the United States and other countries.

Havana has said it will eliminate the 10 percent penalty altogether once
international banks allow the country to carry out international
transactions in dollars. The Obama administration has lifted a block on
Cuban government dollar transactions, but banks are still declining to
process them due to liability fears generated by the trade embargo,
which can only be lifted by Congress. Similar fears have stopped other
banks from authorizing the use of their credit cards in Cuba.

Cubans can open Stonegate accounts in the United States but are barred
from accessing them from Cuba.

Despite the thicket of regulations, Seleski said he is heartened by the
fact that his bank is now issuing both credit and debit cards authorized
for Cuba.

"It puts pressure on other financial institutions to come to the table,"
he said. "If you really look at the last 14 months, a lot has happened."

Source: Florida bank issues first US credit card for use in Cuba | In
Cuba Today - http://www.incubatoday.com/news/article83666827.html