Despite Castro Resignation, Canadian CU Cardholders Still Caught in U.S. Embargo
WINNIPEG, MANITOBA, Canada -- Fidel Castro may have resigned as Cuba's president but the impact of his long-running feud with the United States can still be felt by thousands of Canadian MasterCard holders whose plastic has been rendered useless in the popular tourist destination.
It all began last fall when Regina, Saskatchewan-based CU Electronic Transaction Services (CUETS), the provider of credit cards to the majority of Canada's credit union system, was acquired by MBNA Canada Bank, an arm of the Bank of America. CUETS is Canada's largest issuer of MasterCards.
Because the North Carolina-based financial institution processes client purchases in the U.S. for all of its divisions, it is subject to U.S. law prohibiting transactions from sanctioned countries, such as Cuba.
The U.S. embargo-- Cubans refer to it as a blockade--was imposed in 1962, shortly after Castro expropriated millions of dollars worth of property belonging to U.S. citizens and companies. It covers economic, commercial, and financial transactions.
Bank of America spokeswoman Betty Riess said its Canadian customers were informed that their credit cards would no longer be accepted in Cuba with a note on their monthly statements shortly after the CUETS transaction was completed in October.
She said the bank is not recommending its Cuba-bound customers take any specific action, such as applying for a credit card from another financial institution.
"It's really the customer's decision. They have to decide what to do based on the alternatives they have," she said.
Riess declined to speculate on what, if any, impact Castro's mid-February resignation might have on credit union members' ability to use their MasterCards in Cuba in the future.
Bank of America is one of the largest financial institutions in the world serving 57 million customers with $1.72 trillion in assets.
More than five million Canadians belong to a credit union and another 5.8 million --most of whom live in Quebec--are members of caisses populaires, financial co-operatives where business is conducted in French. CUETS doesn't break out how many credit union members across the country hold its credit cards in their wallets. If the numbers in the province of Manitoba are any indication--there are more than 50,000 card holders in the province out of 560,000 credit union member--the national figure is well into the hundreds of thousands.
Glenn Friesen, CEO of Manitoba-based Steinbach Credit Union, one of the largest credit unions in the country, said his staff recommends to all its members that they take more than one method of payment with them no matter where they're travelling.
He said SCU has talked to MBNA Canada about processing its transactions north of the border but to no avail.
"It is a problem. It took us by surprise, we weren't expecting this. We had no control over the sale of our credit card company," Friesen said.
Friesen said he isn't aware of any SCU members who have been left without access to credit while on vacation in Cuba-- the second most-popular sun destination for Canadians after Mexico--but the credit union has a contingency plan to handle such emergencies just in case.
"We would wire them some money. It wouldn't happen in an hour but probably in a day or two," he said.
Friesen said despite the Cuba issue, SCU is currently happy with MasterCard as its credit card provider but if other problems arise, he'll consider switching to Visa.
"We're here for our members but if all of a sudden the product we're offering isn't meeting their needs, we'll look at alternatives," he says.
Randa Stewart, vice president of marketing and brand management at Assiniboine Credit Union in Winnipeg, said she's advising Cuba-bound members to use other credit cards in their wallets, if they've got them.
"We've let CUETS know we're not happy about this. The worrisome part is people travelling to Cuba who aren't aware of this change and they're caught off guard. We're doing everything we can to let them know but I imagine there will be some people caught unaware down there," she said.
Stewart said Assiniboine is doing its best to inform members about the potential problem, including posting a message on its Web site.
One of the challenges facing Canadian credit unions in trying to discover members travelling to Cuba is its currency, the convertible peso, can only be purchased after landing on the island and isn't available in international markets.
But not all Canadian credit unions use CUETS MasterCards. Jane MacCarthy, communications consultant at Vancouver City Savings Credit Union, the largest credit union in the country, said it is one of the few to issue VISA cards and has been doing so for nine years.
"(Other credit union members) could come to us for a VISA card if they want to keep it in the credit union family," she said.
Ron Monet, director of corporate communications for BMO Financial Group, one of Canada's "Big Five banks," said it processes its transactions in Toronto and Montreal so its more than five million Mosaic MasterCard users aren't affected by the Cuba-U.S. situation.
"It's an BMO-branded MasterCard and we essentially set the parameters for processing and usage. We're not subject to any third-party country regulations or U.S. policy. Our card is accepted in Cuba," he added, noting every other Canadian bank issues Visa credit cards.
Assiniboine Credit Union members Darren Peshke and his wife, Laura, had to scramble to apply for a bank Visa card prior to their annual vacation in Cuba in February. It arrived in the mail days before they got on their plane bound for Holguin.
He says they have always used a CUETS MasterCard on their trips--which also include their eight-year-old son, Trent--but they didn't realize it wouldn't be accepted until reading it in the newspaper in late January.
"I called MasterCard to find out why we weren't notified and it took three hours to be told to read something in the fine print on our statement," he said.
"How come I can use the same credit card through my travel agent to pay for my trip to Cuba but I can't use it in the country?"
Peshke said if he wasn't able to get his new Visa card fast-tracked in time, his family would have had to take down a wallet full of cash, use travellers' cheques -- which are accepted sporadically in Cuba--or rely on a friend's credit card when doing any out-of-resort activities.
"It's pretty annoying that Canadian financial institutions are relying on American rules. It's that whole American thing. My own account manager was unaware of it," he said.
There are no firm numbers on how many Canadian credit card holders have been left in the financial lurch in Cuba since October. Based on CUETS figures over the previous 12 months, it would have been a fraction of its customer base. According to an analysis of MasterCard credit card and GLOBAL PAYMENT MasterCard transactions in Cuba and other now-banned countries, including North Korea, Iran, Myanmar (Burma), and Sudan, only 694 GLOBAL PAYMENT transactions and 2,271 MasterCard credit card transactions were made in Cuba. That's out of approximately 34 million CUETS transactions made in more than 28 million locations around the world.