Cuba is resourceful. We have seen it in the classic 1950s American cars Cubans have managed to keep on the road despite lack of new parts. This is just one high profile example of how Cubans have worked hard to compete with limited resources.
When President Obama visited Cuba earlier this year, he pulled back a curtain that had been closed for more than half a century, revealing a vibrant, resourceful economy eager to do business with the United States. President Obama’s visit cleared the way for this one-time pariah nation to normalize relations with the U.S.
On his trip, the president was joined by e-commerce professionals, with payment processing service Stripe quickly announcing that they would be serving Cuban tech start-ups. Big U.S. companies like Netflix and Airbnb are also now trading in Cuba, paving the way for technology to transform the way in which the country is accessed by its citizens and consumers.
While full diplomatic relations are still a ways off, signals from both countries have raised the ecommerce industry’s expectations around future trade and the lifting of the current embargo between the United States and Cuba. Its clear resources within Cuba will be less of an issue and that American companies are looking to gain a foothold into a market with 11 million people and a rapidly growing tourism economy.
The electronic payments industry has a real opportunity to be at the forefront of Cuba’s e-commerce revolution, helping businesses to try out new ways of trading with customers. This isn’t just building on what’s been working – the opportunity here is to build an infrastructure that need not rely on legacy systems. Just because Cubans know how to make a car from the 1950s run for decades doesn’t mean this spirit should limit them to building on what exists. The opportunity is here to create something new that will put Cuba’s e-commerce foundation in place for decades.
An increase in e-commerce and electronic card payments into Cuba also means an increase in fraud. From our Q2 Cybercrime Report issued last month, Cuba already ranks in the top 50 as a cyberattack originator. Even though there’s enough of an infrastructure for cybercrime to exist in Cuba, the true opportunities are there for placing proper infrastructure in place to both prevent attacks and for merchants to accommodate travelers and international commerce. Success will be measured by Cuba’s ability to quickly mature its electronic payment structure with 21st century fraud prevention in place, ensuring international visitors don’t go from being welcome to becoming victims of payment card fraud or identity theft.
For Cuba to thrive, there are many aspects that will need to be in place:
Infrastructure improvements: Cuba’s broadband, mobile and WiFi networks are almost nonexistent, with current access limited for the public and businesses. This state control over technology poses current difficulties in helping Cuba to position itself as a digital nation, particularly when access to the internet is limited and when available, too costly for the average Cuban to afford.
Regulations: The government heavily monitors Cuba’s infrastructure and terms of employment for Cuban citizens. Self-employment is strictly regulated, and these barriers would need to be removed in order to encourage the e-commerce industry of both nations to flourish.
Embracing and defining digital identity: E-commerce can play a leading role in shaping Cuba’s digital identity infrastructure and help to establish a start-up community within the country. The establishment of a common language and digital currency would need to happen before real business could begin, but with a nation hungry for change, investment in Cuba’s digital identity infrastructure through e-commerce would be a great opportunity for U.S. businesses.
Safety and security assurances: The e-commerce sector needs to ensure that trading with Cuba is safe, and companies like ThreatMetrix are leading the way for secure transactions through best practices and a global shared intelligence network. With features like authentication, fraud prevention and threat detection, businesses can be safe in the knowledge that transactions would not put their livelihood at risk. When Cuba’s gates fully open for American visitors, they will need to quickly introduce 2017 sensibilities into an infrastructure that pre-dates the 1960s.
Government support: Through measures like the Cuban Assets Control Regulations, companies are now able to process authorized transactions and activities related to other financial services with support and safety assurances from the U.S. government.
Encouraging cross-border transactions: In a healthy national economy, tourism dollars and cross-border transactions represent approximately 10% of GDP. Americans’ curiosity with Cuba, combined with the country’s already global perception as an idyllic tourism destination gives it a leg up on other countries that have been closed off from the rest of the world. For Cuba to convert this curiosity into sustainability will require empowering merchants with the right tools for authentication and fraud prevention.
We’re already seeing businesses scramble to serve visitors coming into Cuba. Serving Cuba will also require empowering Cuban merchants.
In 2014, as President Obama was testing the trade waters with Cuba, he said, “We have the opportunity to influence the course of events at a time when there’s going to be some generational change in that country.”
The private sector is pushing for more normalization to give more tangible benefits to the people of Cuba as well as businesses entering Cuba. This represents an unprecedented opportunity for a nation to enter the world stage in a way that converts positive images of ingenuity and resourcefulness to a world-class approach. Change is going to happen in Cuba. The opportunity is here to make that change a powerful, sustainable one.
Armen Najarian is CMO of ThreatMetrix. He can be reached at anajarian@threatmetrix.com or on Twitter at @armennajarian.
