Square Canada has a Cuban coffee issue | Hacker News Reader

Square Canada has a Cuban coffee issue

cbc.ca

142 pointssalad77103 comments

And this is exactly why the US domination of the payment industry is so dangerous, why companies like mastercard/VISA need to end, and why maybe sometimes it's understandable countries like Germany or Denmark have their own card systems or prefer cash.

Running all transactions through companies subject to foreign laws makes you subject to those foreign laws. And there is no reason US laws should affect e.g. a Canadian in Canada doing business in Canada with other Canadians.

The current situation is extremely unjust, because as German in Germany interacting with other Germans, I'm suddenly subject to US laws on which I can't even vote. Being subject to laws which I can't influence in any way democratically is unacceptable, and needs to end.

Either we as society should go back to cash, build our own payment systems to replace the US-based solutions, or end the US hegemony that even allows the US to spread its laws this way.

Curious how you feel about GDPR (the EU asserts its authority to bind an American entity with servers in America running a service targeted at American consumers so long as a single EU citizen chooses to visit the site).

In theory*

In practice if you've got no presence in the EU, what can they realistically do? Extradite over GDPR?

You could have one GDPR compliant site in the EU and a different international one.. or just block EU. Nobody is infringing on someone else's sovereignty in that case.

Some sites actually do block visitors from the EU. E.g. the Chicago Tribune.

Only inasmuch as it pertains to the data of the single EU citizen. The American entity can do whatever they want with their American consumer data.

In a certain sense, you didn't "vote on" the sanctions, but, when the system works as it should (prior to the current US administration, for instance) these kinds of decisions that affect international infrastructure are made with broad consensus---including the approval of people you _did_ vote for, or at least the approval of other nations whose interests are broadly aligned with yours.

This alignment of interests has reduced the transaction costs of building global systems like payments infrastructure, because of the assumption that parties with the technical ability to control their functionality will be constrained implicitly by international norms. I wouldn't dismiss this outright as "hegemony"---it worked well for a long time---but it's natural in the current political context to wonder if assuming good faith from all parties involved will be as reasonable in the coming decades as it was in the past.

Remember that the EU was actively working with Iran to find a solution that works for everyone, while Trump on his own reinstated the sanctions.

This argument could have been made in years past, but now, when sanctions can be reinstated by a single mad man instantly, the argument no longer holds.

You are not following recent (6 months) news, are you.

Nothing you write is valid anymore, unfortunately. We didn't want it, but have no say in the matters whatsoever. Maybe this isn't so visible to US person, fed daily with strongly biased US news, but outside world sees this pretty clearly and is darn annoyed.

The parent comment is right, we need alternatives that are actually beneficial to (World - US), which is > 95% of the mankind.

> Either we as society should go back to cash, build our own payment systems to replace the US-based solutions, or end the US hegemony that even allows the US to spread its laws this way.

I think once the initial tech boom ends and good engineering talent becomes cheaper and more abundant, we're going to see a lot of countries building their own systems for the things that governments typically have control over. Exchange of money and proof of identity will probably be highest among those.

"countries like Germany or Denmark have their own card systems or prefer cash"?

Denmark is an almost cashless society, and the cards I have from danish banks are mastercard - is there a different card system in Germany?

In the past Denmark used to use Dankort, an entirely local payment system.

Often they were used in combination with MasterCard/Visa, but in local stores, only Dankort is used, and the transaction stays in Denmark

They need to just give her the $14k immediately and then eat it if it's a problem. Stop processing the transactions going forward or until it's sorted out, but do not steal her money. Also, I found this distasteful:

"I want to clarify that Square is not experiencing a technical glitch. While I cannot speak with you about Monica's individual case, I can tell you that Square's Customer Success team spoke with Monica yesterday, and she now knows the reason"

How incredibly tone deaf to use such a condescending, bullshit phrase as "customer success team" when speaking with the media in a situation where they are clearly failing the customer. A simple "we spoke with her" would do.

If the question is legal liability for violating sanctions, releasing the $14K could put them on the hook for much more than $14K in liability.

No excuse. This is Square Canada. They made a promise to this client and it's not like they stopped taking money on her behalf as soon as they realized there was a problem. Whatever backend problems they have are their own problem and their own liability.

If they aren't able to do that then maybe this company should not be operating in Canada in the first place.

[edit: oops, I meant Square not Stripe!]

Square, not stripe.

Not releasing can put them in violation of Canada's Foreign Extraterritorial Measures Act so they are between a rock and a hard place (particularly Foreign Extraterritorial Measures (United States) Order, 1992 https://laws-lois.justice.gc.ca/eng/regulations/SOR-92-584/p...)

Oh ouch.

And Square Canada is subject to Canada's laws first, even if its parent company is subject to some other country's laws later on.

Doesn't matter. She is doing business with Square Canada. If it comes to it, Canadian courts will find in her favour and the judgement will be enforced against Square Canada's assets.

So why not continue to refuse to pay the sanction-risked funds and enter into a private settlement for an amount of, say... $14,159.26 for failing to comply with their agreement and Canadian law?

I agree. Unless there is an actual law telling them to hold the cash. I would let go of it. Cut out future transfers as you said. Why PayPal like companies can just steal cash like that is beyond me. They should be legally liable for the laws broken if they keep someone elses cash.

If this is an OFAC case, which anyone who’s worked for a financial institution can tell you this sounds like a dead ringer for, there is literally an actual law requiring them (both JP Morgan and Square) to withhold the funds.

None of the companies involved even actually get to keep the money IIRC as it’s eventually handed over to the US government. Everyone involved would almost certainly love to save themselves the headache and bad press of this situation if it were at all possible.

When there’s an article about PayPal, Square, or any other financial institution holding on to some person’s cash for vague, inexplicable reasons and refusing to hand it over, the reason is virtually guaranteed to be OFAC. They can’t turn over the funds and they can’t even explain why they can’t turn over the funds without someone facing potential jail time.

“We’re not experiencing a technical glitch, this was entirely an organisational screw-up”

This was my main takeaway from the article. Call a spade a spade. "Square's Government Fear team spoke with Monica yesterday, and she now knows the reason."

It's completely legitimate for a corporation to be afraid of the government, and have a team to manage risks. It's not legitimate to call stealing $14,000 of someone's money "customer success". What Square's team did was fail the customer. That's not success.

The name is what it is. How would you feel if your company went to the media and made up some nasty name for your team because the real one sounds too positive?

I think everyone should be accountable for their role. If you're on the "customer success team" but you can't help customers, that probably feels pretty bad.

She may have a case if she sues. It would depend on the fine print in the Square Canada agreement. If they say they process money through the US, she might be out of luck. If they don't then she has a case.

It’s probably not worth suing someone for $14000 though.

In Canada the loser pays all legal costs.

Maybe they have the equivalent of small claims court...

There is a bigger story here and I'm glad it's made visible to more of the general public, and I really hope more people listen intently; the underlying technology running your favorites apps are sitting on servers on US soil and prone to US laws.

that needs to be a title of the next headline, especially for anyone installing apps under the disguise of "privacy".

Yes, that was made visible by the blocking of github accounts for developers in Iran, Syria and Crimea [1]. The US can disrupt whole businesses just by blocking access to fundamental services, tools or equipment. That's some nice political power right there. Free stuff is always a double-edged sword. You can't have free Google, free Youtube, free FB, free Github, free everything unless you also give back something. In this case, it limits the options of Nation States where most of its citizens use these free services on a daily basis. One wrong move, and the Government of said Nation State will have a nice (color?!) revolution on their back.

In the end, good for US for having the brains and the determination to build all these systems, conspicuously. I'm sure Russia does the same or is striving to do the same. Different methods, same desired outcomes. It will be interesting to see what China will have in store in the coming years.

[1] https://news.ycombinator.com/item?id=20552797

US government and US payment companies like Visa and Mastercard complaining about India building its own payment processing systems (RuPay).

Countries who depends on US and its companies for technology are very much vulnerable to these type of bullying.

Countries need to look on bigger picture and develop self sustainable technology ventures and US should stop bullying countries with technology to retain the trust.

I used to (nearly 20 years ago) roast coffee in Whitehorse, Yukon Territory Canada, and folks from Alaska would often stop in the shop. People that bought Cuban coffee often requested it be rebagged and just labelled “coffee” for about the same reason.

Hey I just stopped in at midnight sun coffee roasters for the first time last week. Good place.

Haha! That’s the one, but I worked in the old building that was burned down when the neighbouring business sparked a fire :(

Might be just a coincidence, but it seems Square is turning it's back on the coffee/cafge industry that it did a lot of it's brand building on the back of:

https://sprudge.com/square-just-increased-their-transaction-...

They've used the industry for good PR like this: https://squareup.com/au/en/townsquare/2018-australian-coffee...

I guess they'd prefer to not have sub $5 transactions any more...

I once bought cigars at the Duty Free on my way into the US. Spent the next 2 hours dealing with an agent who'd clearly just been transferred from the southern boarder since the receipt said "Havana Style". I really hope the US is able to normalize relations with Cuba some day.

It's beyond time to end the embargo against Cuba.

And it's beyond time Cuba end it's 2 ounce coffee rations every 15 days for Cuban citizens. That wouldn't last me 15 minutes.

per Wiki: "Domestic distribution is currently limited to two ounces of coffee rations every 15 days for Cuban citizens.[13]

They have rations to make it accessible to all, they are a poor country crippled by a long lasting embargo. Cubans are very sweet people. Their politics attempted to keep they away from american greedy companies. Just look around the caraibean region. Countries that played ball with the US are in a very bad shape, a la economic hit man and such. Cuba managed to keep the people poor but with dignity, education, health care, for all its citizens. They manage with what they have and they’d do much better if it wasnt for the embargo.

I don’t get why this is being downvoted. I’d rather get a comment on why you disagree

I don't know if this is why it's being downvoted, but there are a few too many assumptions here for my taste. To start, it's unclear why they'd do much better if it wasn't for the embargo while you also claim they benefit from keeping themselves away from "american greedy companies."

For example: How do you expect trade resulting from an end to the embargo would be handled differently, and how would Cuba be less susceptible to the relative economic dependence on the US that affects many other countries in the region?

They are a poor country ravaged by a tyrannical regime that has lasted as long as it has because Cuba is but a slight annoyance to the US after the Cuban Missile Crisis- nothing more, nothing less. Even if there was no embargo, the Castros would still be there doing as they wish. God knows they're trying to do the same with Venezuela.

EDIT: None of this means I'm pro-embargo, or into US meddling into things they have no business in. Just that ultimately these embargoes do little in the grand scheme of things to stop dictatorial regimes. A tyrant has no reason to play by the rules, especially when money is involved.

> ravaged by a tyrannical regime

Yes, the United States is a tyrannical regime. The embargo is an injustice.

The suggestion that this has anything to do with tyranny or dictators is ridiculous as well. The US has a long and consistent record of supporting hideously repressive Islamist monarchies like Saudi Arabia, and it is clear that they do not actually care about democracy or freedom in practice.

the article you cite also states "the total number of hectares where coffee is harvested in Cuba has fallen from 170,000 hectares (420,000 acres) in 1961 to 28,000 hectares (69,000 acres) in 2013." (https://en.wikipedia.org/wiki/Coffee_production_in_Cuba)

Why do you think that is now?

Specifically, two events: "The plant was introduced by Jose Antonio Gelabert in the 18th century. French colonists later brought their own production methods and by the time of the Cuban revolution in 1959 the country was a major global exporter.

The political context and nationalisation of the industry led to much-reduced production."

followed by another whopper: " With the collapse of the Soviet bloc, Cuba lost 80% of its export trade." https://www.perfectdailygrind.com/2018/09/exploring-cubas-co...

Which makes sense when the largest trading partner in the world which happens to be 90 miles from their shores won't do business with them.

The USSR did business with them as a middle finger to the US. The US doesn't do business with them as a middle finger to...the cuban people, the majority of which weren't even alive during the revolution.

What is even the justification for the embargo at this point?

The justification is that Florida is a swing state, and full of Cuban expats who really, really hate Castro and want the embargo to continue. These expats have the ability to swing Florida's vote, and thus Presidential elections, so both parties have to give them what they want. It's a wonderful example of how the fucked-up Electoral College distorts national policy, since a large majority of Americans overall think the embargo is stupid and should end.

Square says it's "working on" getting Mustelier her money back. I feel like, at this point, they ought to simply pay her out of their own pocket. They were the ones who put her money in a bank that was not fit for purpose. Even if they didn't realize this would happen, they've violated their obligation to her, and they need to fix it now, not after a few more months of wrangling.

The fact that they’re “working on it” should be a strong hint that it is not as simple as writing the merchant a check and wiping their hands of the situation. As a US financial entity, Square is subject to the same laws and regulations as JP Morgan, the bank holding on to the frozen funds.

By operating in Canada, Square Canada is subject to Canadian federal law: https://laws-lois.justice.gc.ca/eng/regulations/SOR-92-584/p... .

By being a US-based company, they are also subject to US law.

If you believe you have a general solution to the problem of incompatible edge cases in international financial regulation, there are many, many companies who would be willing to make you a very rich person in exchange for that information.

I don’t have a solution for the general case. I do think I have a solution for the specific case: Mustelier would have to get a Canadian lawyer and sue for damages plus lawyer and court fees. Square Canada would settle for this amount and ask her to sign an NDA and offer extra for her to sign the NDA. Square Canada would write-off the settlement as a loss. Square Canada would forfeit the amount frozen by JP Morgan Chase.

Yes, this solution is probably still not good enough. Maybe Square Canada’s US parent would still have to pay a fine.

I understand the what US law will be broken if JP Morgan Chase releases the funds in that a U.S. entity would be party to a transaction involving Cuban goods. However, right now, said U.S. entity is effectively party to a theft involving Cuban goods and Canadian funds.

The Square Canada corporation may still be directly prosecuted for violating the Foreign Extraterritorial Measures Act. It is designed to prevent the United States from interfering with Canadian business.

That Square Canada has a parent corporation is immaterial. Seize assets from the Canadian company to pay the $1.5 million fine for violating the act.

If this is unacceptable, then Square Canada is no longer a legitimate business and Square can't have a legally operating subsidiary in Canada.

Square should definitely set this right ASAP she's not doing anything against. I wonder if she had named her stand Canada Beans, would this have happened? The nerve

A couple of my friends went to a restaurant together in the US. One of them paid with card, the other friend paid the first friend back by sending him a transfer by PayPal or Venmo, I cannot remember which. The amount was around $10-$20. The description said Persian restaurant or Iranian restaurant, because that's the kind of restaurant they had gone to. The transfer was blocked and the transfer amount remained in frozen state for over a year.

Ask anyone from one of the countries sanctioned by the US, like Cuba or Iran. This kind of experience is not new and it is not an exception. I no longer get surprised, just more and more disappointed.

OFAC lists are no joke, you will go to jail for disregarding it.

The name of an ethnic restaurant has nothing to do with the corresponding country, legally speaking. That's just a stupid software glitch.

Nah, you think the guy doing this is working that hard?

Then he ought to be fired.

American workers are scared of being perceived as anything else other than a YES MAN. The guy being told he has two-three days to implement OFAC can't say NO or they'll find someone to replace him that will say YES so he'll implement the shortest answer that causes that 'feature' to be marked as 'complete'

Even a random Excel geek would know that a "name" field is not the place to go for OFAC implementation. Or at least, not for a restaurant. I'm sure that they can link to corporate and banking data.

It doesn't really matter what someone knows, what matters is the payoff matrix:

Apply OFAC blacklisting extremely overly aggressively ... suffer an insignificant number of pissed off customers (who probably don't even leave you because everyone else is also awful).

Apply it as non-agressively as you think the law permits, or somewhat more than that... and find out that you're facing criminal charges because a prosecutor thinks the line was slightly different where you thought it was.

The situation is made more complicated in part because if prosecution isn't aggressive there are enormous sums of money ready to flow through whatever loophole exists and plenty of _bankers_ happy to help guide clients in blacklisted places through them. [ https://www.nytimes.com/2019/04/09/business/standard-charter... ]

“Setting things right” would, in this case, potentially set Square afoul of federal law. Worse, not doing so may violate Canadian law.

International law is wildly complicated and full of landmines. I suspect Square would strongly prefer to just disburse $14,000 and set things right. Unfortunately the cost of doing so potentially involves prison time for anyone who made that happen.

Even something as innocuous-sounding as explaining to the merchant why they can’t release their funds is potentially grounds for an arrest. Whenever you see an article or blog post about Square, Stripe, Venmo, PayPal, or any other financial company having a pissed-off customer who’s owed money and can’t even get a support person to explain what’s wrong, the answer is virtually inevitably OFAC, and there is often literally no legal path forward to make the affected party whole at that point.

Wow. Thanks for mentioning so, I had no idea is was such a widespread problem. All due to cutting corners on implementation while still wanting it to look legit.

I believe Stripe and/or has the same issue. One of the roasters I like to buy from in Toronto has beans from Cuba, but can't sell them online.

> "I was kind of shocked and mad, because we're a Canadian company using Cuban goods bought and sold in Canada,"

Using an American payment company and an American bank, both of which are subject to American laws and aren't going to risk breaking a trade embargo, regardless of whether this particular case is 100% legal or not.

Also not sure why the headline says Square Canada when the article makes it clear that it is JPMorgan Chase which is holding up the payment.

So what’s the solution here? Use China’s Unionpay network?

Or, you know, literally any Canadian payment processor

Such as?

30 seconds on Google suggests Payfirma, Moneris, and TD Merchant Services, all headquartered in Canada.

I haven't deep-dived on any of them, so those specific ones may not be suitable. But Canadian banks exist, and Canadian payment processors exist. This can't be hard.

They probably also suck by comparison. But she should move to one of them now that she's aware of the problem.

Hard to suck worse than literally not processing any payments.

No interface sucks more than not getting paid...

Like... Square Canada?

But the article states the problem are the funds are going to a US bank.

If believed, she could just have the funds go to a Canadian bank and the problem is solved.

Doesn’t really have anything to do with Square.

The article specifically states the issue is on Square’s side with their (Square) using JP Morgan Chase.

Ahhh! I misread it. It’s Square Canada’s US bank account. Customer has a Canadian bank account.

Square screwed up!

The funds are already in the US bank, and it won't release them.

She’s transacting with Square Canada: that Square Canada transacts with a US bank is not her problem unless it is spelled out in her merchant agreement.

If I ordered an expensive item, the seller or the shipping company chose to mail it through a jurisdiction where the item was illegal, and it was confiscated, I would 100% expect them to take responsibility for replacing my item immediately. They can wrangle the cost back from the confiscators on their own time.

I don't see this as any different. Square took on the responsibility to deliver this woman's money, and it has failed in that responsibility. Exactly how they failed should not be her problem. They need to make it right.

It is illegal for a Canadian company, in Canada, to be subject to or comply with American extraterritoriality laws surrounding Cuba.

https://laws-lois.justice.gc.ca/eng/regulations/SOR-92-584/p...

I think the distinction of JPMorgan being the processor that denied the transactions is relevant here. IANAL but it's unclear to me that Square Canada is at fault for depending on a company that happens to comply with US laws.

If my bank took my money, and ran off with it, and then blamed it on bad behavior of some third party that I have nothing to do with, I have two things to say:

1. Not my problem.

2. Fuck you, pay me.

If they can't find counter-parties that let them do their jobs, they should not be in the business of payment processing. I don't get to pick which third parties my bank interfaces with.

They're working on refunding her the money. I'm not sure running off with it is an appropriate comparison here. They just don't want to work with clients that have a business relationship with Cuba in the future.

How much work does cutting a 14,000$ check requires? It been going on since August. For a foot truck operations 14,000$ must be a significant toll on cash flow. It's inexcusable.

I agree, and I definitely don't want to excuse it. I would maintain that the analogy used is inappropriate given that they're still in contact about the money.

That is not an option if they want to continue to operate in Canada. They are in plain violation of the law if they refuse to deal with entities that deal with Cuba.

Mustelier is Canadian and says she has no idea why a U.S. embargo is affecting her Canadian business.

The article claims her money is going through a US bank.

Not surprised this happened at all.

It was Square Canada’s choice to route her money through a US bank. If her merchant account agreement has no mention of this possibility, then she is totally in the clear.

Some other commenters have already linked the relevant Canadian law that is broken by the stopped payment: https://laws-lois.justice.gc.ca/eng/regulations/SOR-92-584/p... .

Amusingly, they literally show someone serving coffee with an endorsement from a coffee shop on their Canadian sign-up page for food & beverage services. https://squareup.com/ca/en/solutions/quick-service

The vendor claims to buy beans from a Canadian distributor. It's not immediately obvious how to get from "bought beans in Montreal, sold Coffee in Toronto" to "funds frozen for doing business with Cuba." The devil must be in the details of the embargo.

Once something gets flagged as a potential violation, it turns into a guilty until proven innocent situation. Square has much more to lose than just some bad PR or the spread on $14K so they’re fine with freezing the money until they get a clear ruling from the US regulators that could put them in a proverbially vice. The name “Havana” probably tipped off something and now it’ll be stuck like that until a high enough exec decides to take the heat for cutting it loose.

If you want to try this out yourself (don’t do this...), send money to a friend via Venmo or equivalent, put something blatantly criminal in the description like “Heroin” or “ISIS tuition”, and see what happens.

I always put something suggestive of prostitution when I Zelle money to my partner. Have not seized our money, yet.

I've put everything from "erotic services" to "5kg of cocaine" in the memo fields of cheques, bank transfers, and interac e-transfers and never had an issue of any sort.

From my understanding of the article, they are Cuban beans.

TL:DR - Funds routed through the US are subject to US laws and regulation, no matter if the origin, and terminating point consider the act legal.

Long: If they held the funds, it's because someone at the ACH saw the business name, and automatically assumed that there was a potential liability (that happens, it's rare, but they will shut you out until you talk to them to prove your innocence).

If they were the more enterprising type, the person who made the call looked up their web site and read how they purchase their beans from Cuba. While fully legal in Canada, if the funds are routed through the US(I can almost guarantee it), JP Morgan can be held liable, and as such they would like to avoid the repercussions of the US government.

The US banking system is incredibly risk adverse. They do things like automatically flag transactions with words that might indicate a violation of US sanctions, such as Havana or Cuba. Venmo, for example, is infamous for questioning transactions with keywords like this.

This is where it is too bad bitcoin did not become more mainstream allowing people to just exchange money without permission. But perhaps these are the incidences that will lead to the mainstream use of things like bitcoins.

People are all fine and dandy with the status quo until they fall on the wrong side of a dispute involving their money.

Perhaps those cryptocurrency wackos aren't so crazy after all. Perhaps.

Somebody needs to buy Cuban coffee in Canada, repackage it with a nice "produced in Central America/Aerated in Canada" sticker and sell it to the end coffee stands.

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