PAC – REMITTANCES: TVNZ                                           PACNEWS 1: Tues 02 Dec 2008

Remittance fees for Pacific islanders set to be reduced

02 DECEMBER 2008 AUCKLAND (Pacnews) ----- Pacific Islanders living in New Zealand are paying millions of dollars in bank fees when they send money back home, but that could be about to change, thanks to a new system using ATM machines and credit cards.

Most struggling Pacific Islanders depend on money from family in New Zealand to pay for food and education, and money transfers across the Pacific are estimated to be worth around $800 million (US$423 million) a year.

Dr Manjula Luthria, a World Bank Economist, says that the money transfers are “absolutely a lifeline,” adding that remittances are in a sense “the number one export income for the Pacific.”

However, the fees for sending money home can be extortionate; up to $25 (US$13) can be lost for every $100 (US$52) sent to Apia or Nukualofa.

It is estimated that Pacific Islanders pay $70 million (US$37 million) a year more than they need to in transfer fees, and saving that amount of money would be a major boost to island economies.

The Ministry of Pacific Islands Affairs has promoted a new card-based transfer system, which aims to reduce fees to around 05 percent

Western Union has already responded by slashing its flat fee to Tonga from $20 (US$10) to $14 (US$7), and volunteers at Otara's Awhetu Social Services are celebrating.

“Sending it for very little cost is really excellent for us, “ said Fuimaono Ioana of the Awhetu Social Charitable Trust.

But a Waikato University study found that most Islanders do not use ATMs because the machines are too far from villages.

“It's possible people will take up this opportunity, but there will also need to be a lot of education and awareness raising as well,” said Professor John Gibson of the University of Waikato.

And while Westpac is the first to offer card-based transfers, Kiwibank said it would  not participate because the scheme was flawed and open to money laundering……PNS (ENDS)