Fidel Castro may have resigned as Cuba’s president, but the impact of his long-running feud with the U.S. is still being felt by thousands of Canadians with MasterCards issued by credit unions. Because of a change in corporate ownership relating to the cards, Canadians visiting Cuba will no longer be able to use this type of plastic to pay for purchases on the island.
The root of the problem is this past fall’s acquisition of the credit card business of Regina-based CU Electronic Transaction Services by a division of the Bank of America. CUETS, Canada’s largest issuer of MasterCards, provides the cards to Canada’s extensive system of credit unions.
The U.S. banking giant made the acquisition through its North Carolina-based subsidiary, MBNA Canada Bank. Because that bank processes client purchases in the U.S., it is subject to U.S. law prohibiting transactions from sanctioned countries, including Cuba. And those laws now cover MasterCards issued by CUETS.
The U.S. embargo — Cubans refer to it as a “blockade” — covers economic, commercial and financial transactions. It was imposed in 1962, shortly after Castro expropriated property belonging to U.S. citizens and companies.
Bank of America spokeswoman Betty Riess says its Canadian customers were informed via their monthly statements shortly after the CUETS transaction was completed in October that their credit cards would no longer be accepted in Cuba. Riess says her bank is not recommending that 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. He or she has to decide what to do based on the alternatives he or she has,” she says. Riess won’t speculate on what, if any, impact Castro’s mid-February resignation might have on credit union members’ ability to use their MasterCards in Cuba.
Glenn Friesen, CEO of Manitoba-based Steinbach Credit Union, one of the largest financial co-operatives in the country, says its staff recommends to all its members that they take more than one method of payment, no matter where they’re travelling. He says 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,” he says. “We had no control over the sale of our credit card company.”
Friesen isn’t aware of any SCU members who have been left without access to credit while in Cuba, but the credit union has a contingency plan to handle such emergencies, just in case. “We would wire them some money,” he says. “It wouldn’t happen in an hour but probably in a day or two.”
Friesen says SCU is currently happy with MasterCard but if other problems arise, he’ll consider switching to VISA. “We’re here for our members,” he adds, “but if all of a sudden the product we’re offering isn’t meeting their needs, we’ll look at alternatives.”
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. CUETS doesn’t break out how many credit union members across the country hold its credit cards. If the numbers in Manitoba are any indication — there are more than 50,000 cardholders in the province out of 560,000 credit union members — the national figure is well into the hundreds of thousands.
MasterCards issued by Bank of Montreal are not affected by the U.S. embargo, according to Ron Monet, director of corporate communications for BMO Financial Group in Toronto. “It’s our card, we’re the issuer and we process the transactions in Canada,” he says. Every other Canadian bank issues VISA credit cards.
Bank of America is one of the largest financial institutions in the world, serving 57 million customers with $1.72 trillion in assets. As well, the CUETS MasterCards are no longer accepted in North Korea, Iran, Myanmar (Burma) and Sudan. IE
Some Canadian plastic useless in Cuba
MasterCards issued by credit unions are barred by U.S. embargo laws
- By: Geoff Kirbyson
- March 3, 2008 March 3, 2008
- 15:49