New website tackles high cost of Pacific money transfers

By Sylvia Giles: Pacific Media Centre

High fees for wiring money to the Pacific through banks or agencies such as Western Union erode the earnings of Pacific migrant workers.

A new website, www.sendmoneypacific.org has been launched this week as a New Zealand aid project in a bid to make savings for Pacific families and economies.

The new English-language website - a joint venture between AusAID and NZAid with the slogan “all the information you need to send money to the Pacific” - compares costs as well as time delays, exchange rates and transfer methods.

It shows, for example, that NZ$200, sent from New Zealand to Samoa with TSB Bank, incurs a fee of $65.37, while taking two to three days to be transferred.

Westpac, using the same search criteria, carries a fee of $5.98 and takes less than an hour with the use of a pre-pay card.

The website also allows users to sign up for updates for specific countries.

There is also a plan to move into print, across different languages, in order to target workers who don’t speak English.

Sendmoneypacific.org was launched at the Otara Markets by Pacific Island Affairs Minister Georgina te Heuheu on Saturday.

‘Safety net’
In a media statement, the minister described remittance payments as an important “safety net” for some families.

World Bank senior economist Dr Manjula Luthria says money-transfer companies took $190 million from the remittances flow to the Pacific in the past financial year.

The World Bank website cites international best practice as having remittance fees between one and five percent. Money roaming the Pacific, from New Zealand and Australia, incur fees on average between 15 and 25 percent.

The former Labour-led government announced last August at the Pacific Islands Forum (PIF) in Nuie that its aim was to bring fees to between 5 and 7 percent by 2009 through increased regulation.

However, the new policy under the present government leaves the fate of these fees to the market.

According to sendmoneypacific.org, figures reveal the remittances income as a staple, rather than disposable income as it may be perceived to be.

Remittance payments make up 24 percent of Samoa’s national gross domestic product, bringing the country $128.2 million a year. It is their single biggest source of income.

In Tonga, remittances are equally crucial. In Fiji, since the collapse of both the tourism and sugar industry, remittances bring in more income than the two industries combined.

In-kind transfers
Remittances are defined by the World Bank as “transfers of cash formal and informal, households’ bills paid by the migrant to a third party, and in-kind transfers”.

In a report released in 2006, research carried out in Tonga and Fiji showed that 79 percent of remittances were cash transfers.
In Tonga, 75 percent all remittances were made through fee-based bank or “other” money transfer agencies (such as Western Union).

In Fiji, 69 percent of remittance payments were made using these channels.

In the past, there has been little alternative for the speedy transferring of money.

Remaining forms of transfers were listed as money being physically transferred by the migrant or a friend or a visit to migrant, through a shop, through the mail or “other”.

However the use of these methods was high enough for the World Bank to note that any “official” figures, compiled by banking networks, were unlikely to be truly reflective of actual figures of remittances reaching the Pacific.

Sylvia Giles is a student journalist on the Asia-Pacific Journalism course at AUT University.

Send Money Pacific