Key insights
- Cuba's suspension of Visa and Mastercard transactions, effective June 6, due to expanded US sanctions will likely have a limited direct impact on US equity markets. However, it highlights increasing geopolitical risk and the potential for broader financial disruptions stemming from US foreign policy. This event underscores the challenges for companies operating in or with sanctioned entities, potentially impacting investor sentiment towards firms with significant international exposure or those reliant on global payment networks.
By Dave Sherwood and Kylie Madry
June 3 (Reuters) - Cuba will suspend Visa and Mastercard transactions starting June 6, its central bank said on Wednesday, citing sanctions imposed by the United States that in recent days have led a swath of foreign businesses to sever ties with the Caribbean island.
Cuba’s central bank said a foreign partner that had previously processed credit card transactions for Cuba had decided to limit operations following a U.S. executive order on May 1 that vastly broadened sanctions on commerce with Cuba.
"As a result of this decision, Cuba is unable to receive income from the sale of goods and services through internationally recognized cards such as VISA and MASTERCARD," the central bank said in a statement.
The order is another blow to Cuba’s economy and already decimated tourism industry, as the Trump administration ratchets up sanctions in a bid to upend the island’s Communist-run government.
Credit card transactions have historically been handled by a foreign bank and Fincimex, S.A., a financial arm of GAESA, a military-run conglomerate targeted with sanctions by the administration of U.S. President Donald Trump.
The United States accuses GAESA of secretly hoarding profits from the country’s most valuable industries — including tourism, financial transactions, remittances and logistics — and using them for the benefit of the military and Cuban elite.
Cuba denies those claims and says GAESA has contributed openly to the nation’s economic and social development.
The Trump executive order has prompted an exodus of businesses from Cuba in recent weeks, including foreign hotel companies, airlines and global shipping firms, as investors distance themselves from island institutions sanctioned by the U.S.
Neither Visa nor Mastercard immediately responded to a request for comment.
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