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

Money transfer website seeks savings for Pacific families

By Krista Ferguson: Pacific Media Centre

Pacific peoples will get a boost in financial literacy and save some money thanks to a new website-based programme with handy remittances advice.

Pacific Island Affairs Minister Georgina te Heuheu launched www.sendmoneypacific.org at the Otara Markets at the weekend.

“Pacific families in New Zealand are entitled to a fair go,” says Te Heuheu.

Transparency, fairness and speed of remittances are important – the cost is a burden on low income families.

“If $25 is lost for every $100, this is a loss to both the family in New Zealand and the family in the Pacific,” she says.

A joint NZAid and AusAID-funded project, the website provides a comparison of the fees charged by money transfer operators to send money from New Zealand to other Pacific countries.

It also compares the time it takes for the money to arrive.

Client manager for the website developer, Developing Markets Associates (DMA) Ltd, Jonathan Capal says it is a joint initiative that followed on from World Bank studies that looked at remittance costs for transferring money from one country to another.

“This region has the highest remittance costs in the world,” he says.

“In the UK it costs less than 5 percent to transfer money to India. In New Zealand there is a cost of up to 30 percent, including fees and foreign exchange, to send money to the Pacific.”

Heavy loss
Remittances to the Pacific region amount to more than USD$425 million a year, according to a media release by the minister.

Ministry project manager for the Pacific Remittance Project, Kim Hailwood, says it is estimated that NZ$80 million is lost a year on remittance fees to the Pacific Region.

Three-quarters of Pacific Islanders living in New Zealand send money to family in the Pacific Islands, says Hailwood.

“Money sent to the Pacific outstrips aid.”

The minister says remittances are a critical flow of money into the Pacific and provide an important safety net for some families.

“The money sent helps Pacific communities to be strong and sustainable,” says Te Heuheu.

The website shows that sending $200 from New Zealand to Fiji would cost $5.98 using a Westpac pre-paid card and $34.13 through Western Union.

The calculation was based on figures updated on March 20.

Taking note
Both Westpac and the Western Union deliver the money in less than one hour. Other money transfer operators can take up to three days, according to the website.

Money transfer operators have taken note since the website went live, says Capal.

“No-one likes to be seen as the most expensive,” he says.

“Some banks are starting to update us with offers that are relevant to remittance costs.”

Te Heuheu says: “In the end it’s a benefit to the banks as well. If they provide a good service, they will get good business.”

Westpac spokesperson Craig Dowling says it took the World Bank to dig out the scale of the issue. Banks attended forums coordinated by the World Bank and the Ministry of Pacific Island Affairs, he says.

The World Bank demonstrated how exposed Pacific communities are to these fees. A considerable amount of pressure was put on banks by the World Bank around this issue, he says.

The fees were contributing to a massive burden that could be alleviated, he says.

“A 25 percent fee is definitely too much,” he says. “It’s now up to banks to decide where this lies in their priorities.

“Our parent company, Westpac Banking Corporation, has a large footprint in the Pacific so we wanted to demonstrate our commitment to those communities.

Competitive advantage
It becomes a competitive advantage having the lower cost remittance product, he says.

“We decided we could move more quickly than our competitors. Westpac introduced a new card for remittances to the Pacific last year.

“We think there will be a competitive response. Western Union changed some of their rates when Westpac announced their new remittance product,” says Dowling.

He says a broader response by banks is needed to have a full effect.

“Why hamstring the whole Pacific community,” he says.

Westpac has also used the Otara Markets to promote its remittance product.

“Uptake has been okay, but there is a long way to go,” he says.

Capal says that internet use by different Pacific peoples varies. Samoans have a higher internet uptake compared with Tongan and Solomon Islands communities.

Because of the lower internet access, DMA will be regularly updating printed material to be handed out at churches and community groups, he says.

The website generated interest before the launch.

“It’s been notably picked up by bloggers in Papua New Guinea,” he says.

DMA expect the number of hits, currently several hundred a day, to at least triple following the launches in New Zealand in the weekend and Australia next Friday.

The website is part of a wider Pacific remittances project involving a partnership between the World Bank, Reserve Bank, Ministry of Pacific Island Affairs and the Pacific Cooperation Foundation (PCF).

PCF programme manager Tina McNicholas says the foundation is co-funding the education phase of the project.

“Phase two is much wider than the website. The focus will be on financial capability and a community education campaign,” she says.

McNicholas says she hopes that the website will also have an impact on the high level of fees “we’ll be able to pass on savings to families in the Pacific.

Picture: Pacific Island Affairs Minister Georgina te Heuheu (left) and project manager Kim Hailwood. Photo: Krista Ferguson.

Krista Ferguson is a student journalist on the Asia-Pacific Journalism course at AUT University.

Send Money Pacific