Visa and Mastercard, the two largest card-payment networks, suspended acceptance of Cuban-issued payment cards as their correspondent banks retreated from exposure to GAESA (the Cuban military's business conglomerate) ahead of the 5 June OFAC deadline12. A correspondent bank is the intermediary that clears a transaction between a Cuban-issued card and the global network; when those intermediaries exit, the card stops working at the till.
The suspension traces back to the same Executive Order 14404 designation of 18 May. GAESA controls the financial infrastructure behind Cuban card processing, so a sanction on the conglomerate reaches the rails themselves rather than any single bank. The card networks did not need to be designated; the banks that connect them to Cuba simply declined the secondary-sanctions risk and pulled back.
The damage falls in two directions at once. A visitor can no longer pay by card even at a hotel that stays open, and a Cuban household that kept savings on a card balance cannot spend them. The peso's slide to a record 600 (covered in this dispatch) is partly this: when the electronic dollar channels close, more demand crowds into the informal cash market that El Toque tracks.
