Western Union Resumes Operations in Cuba
Western Union, a major cross-border payment provider, has announced the resumption of its services to Cuba following a three-month outage caused by a cyberattack. The resumed service offers a more formal and potentially less expensive option for money transfers compared to the alternatives used during the outage.
The outage, which occurred in late January, impacted government systems and Cuba's financial infrastructure, leading people to use more costly and less reliable alternatives for sending money to Cuba. These alternatives often involved private companies and cash delivery, with fees typically around 10%, a significant premium compared to Western Union's charges.
Western Union is currently the only major cross-border payments provider on the US-Cuba corridor. US-based customers can now send up to $2,000 per transaction, and recipients can receive the transfers into their bank accounts or debit cards. Transfers will be delivered on the same day.
The resumption of Western Union's service may reduce the reliance on these more expensive and less reliable alternatives for cross-border payments on the US-Cuba corridor. Rodrigo Garcia Estebarena, Western Union's North America and Latin America President, described the service as a "crucial connection" between US residents and their families in Cuba.
However, it's important to note that due to ongoing sanctions and compliance, no dominant large-scale US-based conventional cross-border provider offers fast, low-cost transfers to Cuba without intermediaries. Innovations in digital assets and permissioned DeFi hold promise for future improvements but are not mainstream yet.
When choosing a provider for US-Cuba payments, cost tends to be higher and speed slower than most cross-border corridors. Reliability depends on local agent and compliance infrastructure, and emerging fintech solutions may improve these aspects in the near future if regulatory conditions allow.
In the US-Cuba corridor, traditional MTOs like Western Union via partners face high fees due to regulatory complexities, offering medium-high reliability but medium-slow speeds due to necessary compliance checks, use of intermediaries, and limited direct banking links.
Emerging blockchain/DeFi platforms, while promising improvements due to transparency and potential real-time or near real-time payments, are still in early-stage adoption in this corridor, facing regulatory barriers.
Traditional banking corridors remain slow and expensive due to correspondent banking challenges, pre-funding requirements, and regulatory scrutiny, especially in US-Cuba flows.
This article provides a brief overview of the current state of cross-border payments in the US-Cuba corridor. For a more comprehensive understanding, further research and regular updates are recommended due to ongoing changes in technology and regulations affecting US-Cuba payments.
- The resumption of Western Union's service in the US-Cuba corridor may shift the industry's reliance from costly and less reliable alternatives, as these alternatives often involve private companies and cash deliveries with fees typically around 10%.
- The absence of dominant large-scale US-based conventional cross-border providers offering fast, low-cost transfers to Cuba without intermediaries is due to ongoing sanctions and compliance requirements.
- Emerging blockchain/DeFi platforms, with their potential for real-time or near real-time payments and increased transparency, are promising improvements for cross-border payments, but their adoption in the US-Cuba corridor remains in the early stages, facing regulatory challenges.
