Reducing remittance costs in the Pacific Islands

Despite years of policy efforts from G20 nations, fees for remitting to Pacific Islands are still among the most expensive in the world.

Ula tava tava (throwing club) depicted on Fijian ten-cent coin, 1987 (DeAgostini/Getty Images)
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Key Findings
  • Despite years of international policy efforts to bring down the cost of sending money home, fees for overseas workers remitting to Pacific Island countries are among the most expensive in the world.
  • If remittance costs to Fiji, Tonga, and Vanuatu were reduced to the United Nations’ target of less than 3% per transaction, more than A$79 million annually would go directly to households in those countries.
  • The Australian government should better support Pacific people working under its temporary labour scheme who remit significant earnings home by using existing financial architecture and building up digital capabilities in the Pacific region.


For Pacific Island countries, remittances — money sent home by family and friends working overseas — are a key source of national income and act as social safety nets where social security programs can be underfunded. Remittances help pay for schooling, food, housing, and healthcare, and support families during emergencies. [1] They provide capital for business investment, especially for women. [2] During the Covid-19 pandemic, remittances outperformed foreign direct investment and official development assistance (ODA) as a source of income for low to middle-income countries. The inflows from remittances also maintained foreign exchange reserves and were a lifeline to communities when regular income was disrupted. [3]

After nearly a decade of global leadership on remittance policy by the Group of Twenty (G20), [4] remitting to the Pacific remains expensive, for reasons set out shortly. Digital remittances are the cheapest model worldwide. [5] At a current global average of 4.7% per transaction, the global average for digital transfers is already under the G20 target of 5% and shows promise of reaching the United Nations’ target of less than 3% per transaction by 2030. However, cash-to-cash remittances dominate the Pacific market, partly because “cash remains king in the Pacific and trust in other methods for storing and sending money remains low”. [6]

The development benefits of cutting remittance costs are considerable. Reducing the price of transaction costs to the UN target of 3%, or the G20 target of 5%, would save billions of dollars for households reliant on remittances around the world. [7]

The Pacific Islands region, where remittances contribute significantly to GDP, pays some of the highest transaction fees in the world. In the Australia–Tonga corridor, for example, remittance costs averaged 9.3% per transaction in 2021. Upwards of 40% of Tonga’s total GDP is generated from remittance receipts (A$310 million in 2021). [8]  Between Australia and Tonga alone, close to A$11 million was paid in remittance transaction fees in 2021. [9] The average remittance transaction cost for Tonga was 10.6% between 2009 and 2022. For Fiji and Vanuatu — both recipients of large volumes of remittances — average remittance costs over the 14-year period stood at 10.2% and 14.0% respectively. [10]

Recognising the substantial development benefits for the region, the Australian government has attempted to reduce transaction costs for nearly a decade. Its National Remittance Plan pursues four policy areas: increasing market competitiveness; harnessing new and emerging technologies; enhancing transparency; and encouraging supportive regulatory environments. [11] The plan recognises that remittances disproportionately affect women, who tend to remit more of their earnings than men, use more expensive remitting methods, and rely on remittances more at home. [12] Yet despite the plan’s objectives, remittance costs remain stubbornly above the global average.

The Australia-Pacific corridor

The Pacific Islands population resident in Australia is small, comprising 337,000 people of Pacific heritage, [13] but is growing at a rate faster than the general population. [14] In addition, more than 38,000 Pacific Islands people are working temporarily in Australia under the Pacific Australia Labour Mobility (PALM) scheme. [15] This number will grow in coming years due to a planned expansion of PALM and the introduction of a new Pacific Engagement Visa, allowing families to migrate permanently. [16]

The Australian Department of Foreign Affairs and Trade (DFAT) estimates that between July 2018 and December 2021, short-term PALM workers remitted on average A$1061 a month, while long-term workers remitted around A$1310, equating to almost 40% of their monthly income. [17]

Remittance inflow data are inconsistently available from Pacific nations, excluding the National Reserve Bank of Tonga, which until December 2021 produced detailed monthly and annual reports on remittance inflows. [18] Regardless, estimates for the region are captured by the World Bank and the significant contributions of the global diaspora and temporary workers to Pacific economies are illustrated by the examples of Fiji, Tonga, and Vanuatu. Using World Bank data, [19] Graph 2 shows the (current US) dollar value of personal remittances sent to the three countries between 2000 and 2021, from all sources (not just Australia). [20]

Fiji receives the most inbound remittances by dollar value, with Tonga and Vanuatu reaching close to parity. According to the World Bank, in 2021, Fiji’s remittances totalled nearly US$394 million [21] or around 9.2% of GDP. [22] In Fiji’s 2020–21 financial year, inbound remittances increased by 28%, [23] driven in part by an uptick in mobile phone money transfers during the Covid-19 pandemic. [24] It is difficult to obtain disaggregated data on how much came from Australia, but the Reserve Bank of Fiji shows that over the last decade, more than 60% of Fiji’s remittances came from Australia, New Zealand, and the United States. [25]

In 2021, Tonga’s remittances comprised 43.2% of the nation’s GDP. [26] A more recent report suggests remittances now comprise half of Tonga’s GDP, meaning on average half of Tongan residents’ income is derived from remittances. [27] Four in five Tongan (and Samoan) households typically receive remittances from a range of countries. [28] For the year to December 2021, Tonga received around A$310 million in remittances receipts, of which more than a third (37.6%) came from Australia (A$116 million), representing the highest share of incoming foreign currency to Tonga. [29]

Vanuatu — the largest contributor of people to the PALM scheme — received almost US$208 million from global remittances in 2021. [30] Again, exact data on remittances to Vanuatu from Australia is difficult to obtain. Nonetheless, for these three example countries, there was a notable trend upwards between 2000 and 2021 in both dollar value (Graph 2) and remittances as a percentage of GDP (Graph 3).

The massive contribution of remittances to the national incomes of Fiji, Tonga, and Vanuatu – although likely undervalued – underscores the importance of these inflows. Other Pacific nations are also dependent, to varying degrees, on remittance income, including Samoa, Marshall Islands, Kiribati, and Tuvalu (Graph 4).

While the total increase in income remitted from lower transaction fees might seem small in dollar terms, it is large relative to the size of Pacific Island economies. If fees were reduced to the UN target, the estimated savings for only Fijian households, for example, would be more than A$30 million per year. [31] For Tonga, reducing fees to 3% would save nearly A$20 million per year — roughly half of Australia’s ODA to Tonga in 2020–21. [32] For Vanuatu, similar calculations put savings at nearly A$29 million. [33] Graph 5 shows how far there is to go before these three Pacific Islands reach the global average cost for remitting.

Across these three examples, savings on remittance costs could inject A$79 million into Pacific Island family budgets in just one year — that is around twice as much as Australia’s 2021 financial year ODA to Tonga during the pandemic and is based on likely underestimations of remittance receipts, due in part to remittances also flowing through informal channels. In terms of national income, these estimated savings amount to 2% of Vanuatu’s GDP and 3% of Tonga’s. There are nine Pacific Island countries (plus Timor-Leste) participating in the PALM scheme. For a region that potentially lost a decade of economic development because ofCovid-19, reducing remittance costs could meaningfully contribute to its economic recovery. As it stands, an estimated US$3.5 billion (A$5 billion) multi-year support package is the minimum needed for the regional economy to fully recover. [34]

Remittance policy: challenges and opportunities

Pacific remittance costs are high for many reasons. Some are very difficult to combat. The region’s remoteness, geographic spread, thin markets, and preference for cash are significant contributing factors. [35] But that is only part of the story. There are other factors more amenable to change if the right policy levers are used, even if a decade of effort to bring down fees has so far borne uneven results. These factors include poor competition between remittance service providers, limited banking infrastructure, and underdeveloped digital infrastructure and literacy.

Lack of competition

Acknowledging that Pacific countries are challenged by thin markets, efforts have been underway in Australia to encourage greater competition between Australian-based money transfer providers. A key problem is price transparency. Some money transfer operators (MTOs) only partially reveal the cost of remitting to consumers, leaving out fees or mark-ups on exchange rates. Remitters cannot compare “apples with apples” to make informed choices on the cheapest operator. [36] The Australian Competition and Consumer Commission (ACCC) calculates that shopping around could collectively save hundreds of millions of dollars annually in the Australian market alone. [37]

In 2019, the ACCC released best practice guidance to address the problem of hidden fees and mark-ups. It advised MTOs to provide a customisable online calculator that estimates the total amount sent to the recipient. [38] Conditions generally improved for consumers after the guidance was released. [39] However, the calculator is only applicable to online, not cash-to-cash operators, in a market where cash-to-cash remitting dominates. [40] The guidance is also not set out as a regulation but instead a voluntary code of conduct, leaving operators to choose whether they fully disclose total fees or not. Finally, the guidance does not solve the issue of hidden fees between the retail rate and the wholesale rate offered by an MTO. This issue is being examined by the Department of the Prime Minister and Cabinet’s Behavioural Economics Team with a view to providing further illumination to customers. [41]

In Australia, the exclusive contracts of popular remitters at convenient outposts, such as Australia Post offices and 7-Eleven stores, further stifle competition. Many Pacific Islanders remit in cash as a group at Australia Post, which has a monopoly with Western Union. Western Union has for many decades been a trusted provider of remittance facilities to the Pacific, but the region’s preference for cash-to-cash transfers means its services carry the highest overheads. [42] Kiosks accepting cash in Australia must transfer electronically to the Pacific, where cash is needed for disbursement at the receiving kiosk. These service providers often operate on tiered fee structures, typically resulting in higher costs for the consumer because fees increase as the amount being remitted decreases, and Pacific Island remittances tend to be low value. [43]

Pacific banks

When it comes to remittances, banks provide one of the few alternatives to using MTOs in the Pacific. The main problem is that the region’s banking infrastructure is perceived as weak, and global banks are increasingly hesitant to do business there. This issue is exacerbated by persistent but often misplaced concerns about efforts to combat money laundering and terrorism financing. The Australian government’s financial intelligence agency AUSTRAC asserts that levels of money laundering and terrorism financing in the Pacific are low. [44] Nevertheless, with business models favouring low risk and high returns, banks are increasingly moving away from correspondent banking services in the Pacific, where options to offset low returns are lacking. The Pacific’s thin market and costly customer verification processes have also led to increased compliance costs for corresponding banks, and as international banks seek to streamline processes, such geographically disbursed services come under pressure. [45] These problems are magnified by a preference for cash economies, leading to higher costs than a digital system.

When global and regional banks are hesitant to do business with a Pacific bank or in a Pacific country, they sever corresponding relationships (known as “debanking”). This has the perverse effect of pushing Pacific banks further into the “risky” category, regardless of their standing. Being outside the global financial system also makes Pacific banks more vulnerable to exploitation. In response, AUSTRAC is helping Pacific nations maintain their low-risk status by improving efficiencies and partnering with Pacific financial intelligence units. [46]

Despite the limited reach of banking services in the Pacific, banks can still play an important role in reducing costs.

A lack of relationships between Australian and Pacific banks has reduced competition and pushed up transaction prices. In many cases, banks have become anti-competitive, denying MTOs access to accounts to facilitate their own transfers, which are often cheaper than the bank’s services. [47] A lack of reform on debanking regulation has therefore disproportionality impacted digital remittance providers. [48]

The Pacific is also “one of the least banked regions in the world” — two in five Pacific people hold bank accounts. [49] Remote living, challenges of access to bank branches and identity documents, and a preference for cash, make participation in the formal banking sector difficult. [50] Having a largely unbanked region means that when banks do provide competitive remittance services, such as waiving some remitting fees, they impact a much smaller portion of the Pacific remittance market than if those fees had been waived for more traditional forms of money transfer, such as trusted but expensive cash-to-cash services. [51]

Despite the limited reach of banking services in the Pacific, banks can still play an important role in reducing costs. The Tonga Development Bank (TDB) and the International Finance Corporation (IFC), with support from the Australian and New Zealand governments, provide ‘Ave Pa’ anga Pau (APP), a cashless remittance service for Tongan overseas workers. APP gives Tongans abroad low-cost remittance services (close to 4.5% and no hidden fees) via an electronic voucher system. [52] Pacific Islanders in Australia electronically deposit funds into an Australian TDB account, and upon receipt, TDB releases funds to the beneficiary in Tonga via a selected bank account.

Despite good design, the program requires people in Tonga to have a bank account. And, as Graph 6 shows, [53] the initiative has done little to bring down the average cost of remitting to Tonga, most likely because traditional forms of remitting continue to dominate, and access to banks continues to be a problem. Replicating this pilot in other countries would help to provide lower fees, but participating banks must commit to a “social mandate” of providing low-cost services to ensure success and policies must be implemented to complement the program, such as requesting PALM visa applicants to have an account at participating banks prior to departure.

Poor digital capabilities

Research shows that digital transfer options, [54] including mobile money and wallets “present opportunities for improvement in cost and convenience that [Pacific Islander] senders may not be aware of”. [55] Because digital transfers mitigate the need for physical service branches, lower overheads translate into lower costs. However, digital transfers still require relationships with financial services operators to facilitate the transmission of funds between countries. They also need digital infrastructure — such as communications cables, cellular towers, and mobile phones — which is lacking across the region and requires significant capital to address. [56] Projects are underway to improve cable connectivity between islands, and between continents and islands, with the most recent — the East Micronesia Cable — funded by Japan, Australia, and the United States. [57] The speed and quality of digital networks will, to a certain degree, determine the expansion of access, and much of the infrastructure will likely need to be subsidised.

Preference for cash across the region is partly explained by the lack of infrastructure supporting digital payments, such as mobile and POS (Point of Sale) devices in small or informal businesses. Digital financial service delivery is therefore restricted by the rate of expansion in mobile technology coverage, which is in turn reliant on electricity and communications infrastructure. Moreover, Pacific Island communities have generally low digital and financial literacy levels, making it hard for people to change between MTOs or move into the digital market. [58]

Nonetheless, the conditions of Covid-19 forced more Pacific Island people into digital transfer services, which increased by up to 400% in Fiji and Samoa in 2020. The amount of money sent to Fiji via one mobile money wallet app quadrupled in six months. [59] However, more mobile phones with “wallet” technology are needed across the region. Overall, while Fiji is an exception, the Pacific is trailing the world in rates of mobile phone subscription. In 2018, only two-fifths of Pacific Islanders had subscriptions, which was six percentage points below the average for least developed countries (44%). Mobile internet penetration per population improved from 18% in 2018 to around 27% in 2022 — but mobile subscription and smartphone adoption remain considerably lower than the global average. [60]

As countries such as Australia make more sophisticated rules around anti-money laundering and terrorism financing, MTOs must ensure they “know their customer well”.

Mobile subscription and internet connectivity should improve along with mobile money services. In the Pacific, around nine mobile money services are operating in six countries. [61] Mobile money services are also expanding across the Pacific and many countries including Solomon Islands, Vanuatu and Fiji have national financial inclusion strategies and enabling regulatory environments for the expansion of fintech. [62] Yet despite high registration levels in some Pacific communities and the drawcard of cheaper services, the pathway to greater financial inclusion will be difficult. Infrastructure challenges, such as internet bandwidth and access to electronic banking services, will continue to dampen the uptake of them in the Pacific.

Governments can incentivise the transition to mobile payments by offering transfers via this medium, among other interventions, [63] such as those implemented in India to subsidise consumer discounts at the petrol pump. [64] Vanuatu is actively encouraging digital transformation. [65] Initiatives include foreign exchange (forex) calculators, preferential forex rates for Ni-Vanuatu PALM workers, [66] and mobile money services for digital remittances. [67]

Responding to the issue of digital and financial literacy, the Australian and New Zealand governments funded SendMoneyPacific, an MTO comparison website. [68] Information is translated into Samoan, Bislama, Cook Islands Māori, Fijian, Niuean, Tetum, Tongan, and the Kiribati language. The website is part of a larger program called Empowering Migrants through Pacific Remittances (EMPR), which includes initiatives on remittance literacy training and direct engagement with more than 60 Pacific Island community leaders. The website has its limitations, however, given a lack of regulation on MTOs providing open format data, and that consumers with low digital literary must use a government website before making remittance decisions.

As countries such as Australia make more sophisticated rules around anti-money laundering and terrorism financing (AML/CTF), [69]  MTOs must ensure they “know their customer well”. With Pacific Islanders often struggling to obtain the identification papers needed for due diligence, [70] more support is needed for the development of Pacific Know Your Customer (KYC) systems that respond to this challenge. Currently, Pacific central banks are helping Pacific Island countries develop eKYC facilities — digital systems of identity verification. [71] Amendments in 2021 to Australia’s AML/CTF Act mean that KYC data can now be shared between entities, making the regulatory environment more efficient and the market more responsive to consumers. [72] Digitising this information and making it accessible to the whole region is a logical next step.


The Australian government has attempted to address the problem of high remittance costs to the Pacific for some years, but solutions have not been quick, easy, or comprehensive. Compounding the issue, it is likely that the Pacific market is too thin, risky, and expensive to ever facilitate the UN’s target remittance transaction rate organically. Policies must therefore address market conditions for all Pacific Island workers in Australia through increased financial services competition, better functioning banks, and more accessible technology, but also through temporary market interventions for Australia’s PALM workers, at minimal cost.

The most practical way forward will be to use a combination of methods leveraging existing infrastructure and practice in the short term while pursuing more effective solutions over the long term. Against that background, in addition to initiatives already activated, the following should be considered.

Short term: Use or adapt existing financial infrastructure and regulation

Recognising that remittances will continue to flow to Pacific Islands as the PALM scheme grows, measures to bring down costs in the near term should be prioritised by using or modifying existing financial architecture.

Improving transparency

The government must legislate on price transparency for all forms of international money transfer. [73] MTOs would need to demonstrate the difference between the retail and the mid-market rate, and the Australian government would need to provide support on how to calculate mid-market rates in real time. Accurate and real-time comparisons motivate consumers to change remittance providers and therefore boost competition. Policing and enforcement alongside digital literacy training will be necessary for the measure to be effective. [74] Failing effective regulation on price transparency, a “good practice” stamp regulated by the Australian Prudential Regulation Authority (APRA) can incentivise MTOs to adopt best practice and encourage consumers to use them.

A review of exclusive contracts for remittance providers at Australia Post (a Commonwealth-owned enterprise) must be conducted to ensure best practice.

Expanding the ‘Ave Pa’anga Pau program

‘Ave Pa’anga Pau should be expanded into other Pacific Island countries. Supported by development partners, this would be guided by the lessons from Tonga’s pilot initiative. The requirement that participating banks have a social mandate committing to low-cost service provision may have to be adjusted so that more banks can participate. Policies such as subsidising commercial banks to provide a similar initiative and supporting visa applicants to set up bank accounts at home prior to departure could complement the program.

Using existing financial architecture as a temporary measure

DFAT can subsidise business services to send regular remittances home through the regular wages system, as is already operating in New Zealand. There, the Seasonal Worker Superannuation Administration Service (SWSAS) is an opt-in initiative supported by New Zealand’s Ministry for Foreign Affairs and Trade. [75] Under this program, employers of seasonal workers send home retirement savings and remittances, with fees set at interbank rates. [76]

Public intervention could provide a temporary measure to bring down costs. Australia’s central bank, the Reserve Bank of Australia (RBA), already sends regular payments (such as pensions) to overseas recipients. The RBA, on behalf of the Commonwealth of Australia, provides transactional banking services to more than 100 Australian government agencies. In the 2022 financial year, the RBA distributed 1.1 million international payments totalling A$17.6 billion. [77] Under direction from the government, Australia’s central bank could administer regular remittances for PALM workers to nominated bank accounts in the Pacific until the market is ready.

The price could be determined by competitive systems. One option is a reverse auction, where MTOs bid for an exclusive contract to provide the remittance service instead of the RBA. If the MTO offers a lower cost service than the RBA, then that MTO provides the service for PALM workers. If the RBA’s service is cheaper than the lowest bid, it would provide the service instead, keeping the public option open. However, if the RBA cost is not low enough, another option is a subsidy, whereby private MTOs and the RBA bid to deliver remittance transactions at prices specified by the Australian government/DFAT and then compete via reverse auction over the subsidy they require, thereby minimising the subsidy. The Australian government could also contract out multiple fixed-rate services to Pacific market providers, for example in country-specific corridors. The bid for the lowest rates would win the contract, thereby creating competition for the market, rather than in the market. Under all public options, the exclusive contract would be up for periodic auction, to keep pace with changes in the market and technology. And to promote further competition, Pacific Islanders working in Australia would not be bound to using them, thereby encouraging competitors to lower costs or offer better services or other benefits.

Intervening in the remittance market given structural inefficiencies and national interest considerations is arguably within the remit of the RBA. [78] The structural lack of competition born from the small-sized Pacific market points to inefficiency. There is therefore a prima facie economic case for public intervention, of which public provision (i.e., by the RBA) is an option. Doing so is also in the interest of the welfare of the Australian people, given the benefits of lower cost remittances for both Pacific development and the sustainability of the labour mobility scheme. Regardless, this policy remains substantial in nature and would require significant political and institutional ambition to be implemented.

Longer term: Prepare for a digital future

While leveraging the existing financial infrastructure will help to temporarily cut costs, going digital is the future. Digital transfers can provide longer-term and cheaper options than cash transfers. They can also improve productivity by reducing travel and time burdens of remitting through cash-to-cash services and can broaden inclusive Pacific economies. [79] There is no underestimating the benefits of digitalising the Pacific, but costs and complications must also be considered, including needs for cybersecurity and supervision to protect Pacific citizens.

Moreover, corresponding banking relationships may still be needed by MTOs to provide this service, so ongoing regulatory support for MTOs’ inclusion in the banking industry will be important. Ultimately, investing in digital connectivity as part of a development program goes further than improving people’s bank accounts — it impacts health, education, economic development, and social connectivity.

Enabling digital identity systems

The Australian government can fund and develop an eKYC system (digital identity verification system) for PALM workers and families using their visa documents. As an opt-in system, PALM workers could nominate two people to participate in the eKYC system during the visa application process. The eKYC would help workers efficiently switch providers using portable KYC data on a central database, reduce operational costs, and encourage regional standards. [80] Data would be decentralised, encrypted, and stored on the user’s mobile phone wallet rather than a digital cloud, giving full control to users and de-risking against cyberattacks. [81] Pacific governments could settle agreements with the Australian government to use the digital identities to build up domestic digital identification systems, which would be communicated to PALM workers at the time of opt-in.

Reflecting the challenges of access to identity papers in the Pacific, a Pacific eKYC system should require identity documents according to perceived risk. Global standards groups have called for a tiered risk-based KYC system like those in Nigeria, Russia, Eswatini, Peru, and Egypt that accommodate less due diligence for lower-value remittances. [82] AUSTRAC recognises the value in risk-based approaches — they improve effectiveness and efficiency of verification. Although tiered risk systems are not “a perfect solution, it beats the alternative: that the unbanked move towards informal remittance channels which are not regulated or monitored”. [83] Learning from these case studies by adopting a tiered system can help Pacific nations transition to a simplified digital future.

Leveraging technology and communications infrastructure

In July 2022, Telstra completed the purchase of Digicel Pacific, a telecommunications and network services provider in the Pacific. Digicel Pacific was acquired with the support of a US$1.33 billion financing package provided by Export Finance Australia. Communities in Papua New Guinea, Vanuatu, Fiji, Samoa, Tonga, and Nauru are now serviced by Telstra, which, as Australian Foreign Minister Penny Wong said,

…reflects [the Australian government’s] commitment to help build a stronger Pacific family through investment in high-quality infrastructure. Telecommunications and digital access are critical to sustainable economic growth and development outcomes… [84]

This purchase presents an opportunity for the Australian government. DFAT should collaborate with Digicel Pacific and “recommerce” providers to offer free mobile wallet facilitation and cheap refurbished mobile phones to the market, including smart phones and feature phones — available for purchase from major Pacific retailers and not attached to contracts with telecom providers to mitigate the risk of profit maximising and bad contracts. Feature phones can access the internet but not perform the advanced functions of a smartphone, making them cheaper but still able to facilitate mobile wallet transfers. Private companies across the Pacific — supported by the Australian government — can refurbish end-of-life electronic devices including phones to re-sell cheaply or donate to unconnected communities. [85] Such partnerships would not only bring critical digital technologies and financial inclusion to Pacific communities, but address sustainability in the Pacific market.

However, the lack of digital infrastructure in the Pacific — including cellular towers, communications cables, and cybersecurity and resilience — is a structural challenge that will also need to be met, primarily by more investment from development partners including Australia, Japan, and the United States. [86]

Ongoing: Coordination by development partners

Traditional development partners in the Pacific want to collaborate. The newly created Partners in the Blue Pacific initiative is testament to growing interest in these efforts. [87] Three of the Blue Pacific partners — Australia, New Zealand, and the United States — provide significant sources of remittances to the Pacific. It stands to reason that collaboration between these three countries be part of any solution to the problem of high remittance costs.

Partnership efforts should focus on three objectives. The first is combining funding for more iterations of the successful Pacific Financial Inclusion Programme. Initiatives could include country-specific forex calculators, preferential forex rates for nations in the PALM scheme, and the roll-out of mobile wallets and digital infrastructure. Collaborative funding for the expansion of ‘Ave Pa’anga Pau would be another option.

Second, Australia, New Zealand, and the United States can collaborate on technical and data support for Pacific countries. Pacific nations expressed a need for technical capacity support for reporting and monitoring on remittances, and for the improvement of IT infrastructure. According to a recent report, Kiribati, Tonga, and Solomon Islands also welcome the opportunity to improve remittance data reporting in line with international standards, including having more accurate data on the actual value of remittances, remittance behaviours, costs, and current pricing data. [88] Alongside support for reporting, Australia, New Zealand, and the United States should establish a central interactive database for remittance flows into Pacific Island countries so governments and policymakers can precisely track remittance flows and average costs of remitting for different methods. As it stands, Pacific countries are likely underreporting remittance receipts due to data and capacity constraints, resulting in data mismatches such as that noted between the World Bank’s global remittance database and National Reserve Bank of Tonga’s reports. [89]

Third, partners could collaboratively reform regional banking standards to seek to rectify the problem of debanking — a problem largely driven by US banks. Donors could encourage more evidence-based risk assessments of corresponding banking relationships with Pacific banks that can then be advocated for among global banks. Simultaneously, partners can support compliance of Pacific banks with global standards. [90] Other measures outlined in the G20 Roadmap could be driven forward collaboratively to ensure a full response by Australia, New Zealand, and the United States. [91]


Australia–Pacific remittance costs will remain high unless there is a shift in policy and more radical thinking to encourage that shift. There is no silver bullet and progress will rely on a combination of short- and longer-term initiatives. Mobile money services and digital financial technology can, in the long term, address financial exclusion and the high cost of sending money to the Pacific. But digital financial ecosystems, competition, and the regulatory environment must be targeted in innovative ways to deliver more money into a region that has great need for it

Ravi Dutta-Powell and Nikola Spadina, “Sending Money Home: Remitting to the Pacific Islands”, The Behavioural Insights Team, 12 August 2022,
Reserve Bank of New Zealand, “Pacific Remittances Project”, 13 December 2022,; and Dutta-Powell and Spadina, “Sending Money Home: Remitting to the Pacific Islands”.
International Fund for Agricultural Development and the World Bank, “Resilience in the Market for International Remittances during the Covid-19 Crisis”, October 2021,
Global Partnership for Financial Inclusion (GPFI), “G20 Plan to Facilitate Remittance Flows”, September 2014,, accessed 2 February 2023.
The World Bank, “Remittance Prices Worldwide Quarterly: An Analysis of Trends in Cost of Remittance Services”, Issue 45, March 2023, 7,
Market Development Facility, “Cashing in on Pacific remittances”, MDF Annual Report 2021, 3 October 2023,
World Bank, “Remittance Prices Worldwide Quarterly: An Analysis of Trends in Cost of Remittance Services”, Issue 45, March 2023, 7,
National Reserve Bank of Tonga, “Remittance Receipts Peaked in December 2021”, 9 June 2022,; and The World Bank, “Remittance Prices Worldwide: Sending Money from Australia to Tonga”, 3 October 2023,
National Reserve Bank of Tonga, “Remittance Receipts Peaked in December 2021”. Conversion of TOP$489.96 million and TOP$169.5 million to A$ using Currency Converter,
The World Bank, “Remittance Prices Worldwide”, 3 October 2023,
GPFI, “G20 Plan to Facilitate Remittance Flows”.
Global Partnership for Financial Inclusion (GPFI), “G20 National Remittance Plan: Australia 2021, Biennial Update”,; and International Organization for Migration, “Gender, Migration and Remittances”,
Huiyuan Liu and Stephen Howes, “Pacific Islanders in Australia: 2021 Census Results”, DevPolicy Blog, 31 March 2023,
According to Australian censuses, between 2006 and 2011 the Australian population increased by 8.3%, and between 2011 and 2016 by 8.8%. The rate of people claiming Pacific Islands ancestry in Australia, by contrast, grew by 33.8% between 2006 and 2011, and by 37.7% between 2011 and 2016. See James Batley, “What Does the 2016 Census Reveal about Pacific Islands Communities in Australia?”, State, Society & Governance in Melanesia, In Brief 2017/23,
The PALM scheme is designed to respond to Australia’s economic needs as well as the Pacific’s economic problems of unemployment, burgeoning youth populations, and naturally limited markets. Temporary work in Australia provides Pacific Islanders with opportunities to upskill and remit. See Emma Field, Eliza Berlage, Emile Pavlich, and Ellie Honeybone, “Pacific Farm Workers Welcome Reforms as Numbers Reach Record High”, ABC Rural, 19 June 2023,
Pacific Australia Labour Mobility, “Applications Open for Aged Care Expansion Program”,; and Australian Government, Department of Foreign Affairs and Trade, “People Connections in the Pacific: Pacific Engagement Visa”,
Australian Government, Department of Foreign Affairs and Trade, “Expanding and Improving Labour Mobility”, 31 August 2022, 2,
PACER Plus Implementation Unit, “Constraints and Opportunities in Pacific Remittance Data: Study on the Remittances Data and Measurement Constraints in Pacific Labour Sending Countries”, July 2023,
Noting that data supplied by the World Bank does not exactly match data provided by the National Reserve Bank of Tonga (NRBT). For example, 2021 NRBT data shows remittances contributed to 43.2% of Tonga’s GDP, whereas World Bank recorded 46.2%.
The World Bank, “Personal Remittances, Received (Current US$) — Fiji, Tonga, Vanuatu, 3 March 2023,
The World Bank, “Personal Remittances, Received (Current US$) — Fiji”,
The World Bank, “Personal Remittances, Received (% of GDP) — Fiji, Tonga, Vanuatu”,
Reserve Bank of Fiji, “RBF Annual Report August 2020 — July 2021”, 20,
It is likely that more money entered the formal remitting system during the Covid-19 pandemic rather than being physically brought over by visiting or returning friends and family. It is therefore not possible to confirm if actual remittance flows increased.
Reserve Bank of Fiji, “International Remittances and Fiji’s Unsung Heroes Abroad 24 December 2020”, 27 February 2023,
National Reserve Bank of Tonga, “Remittance Receipts Peaked in December 2021”.
PACER Plus Implementation Unit, “Constraints and Opportunities in Pacific Remittance Data”.
Ryan Edwards, Matthew Dornan, Dung Doan, and Toan Nguyen, “Three Questions on Remittances”, DevPolicy Blog, 20 July 2022,,of%20Tongan%20households%20receive%20remittances.
National Reserve Bank of Tonga, “Remittance Receipts Peaked in December 2021”. Conversion of TOP$489.96 million and TOP$169.5 million to A$ using Currency Converter,
The World Bank, “Personal Remittances, Received (Current US$) — Vanuatu”, of US$143,692,342 to A$ using Currency Converter,
Remittance total sourced from Reserve Bank of Fiji, “RBF Annual Report August 2020 — July 2021”. The World Bank, “Personal Remittances, Received (Current US$) — Fiji”, 27 February 2023,; and The World Bank, “Remittance Prices Worldwide: Sending Money from Australia to Fiji”, 27 February 2023,
The World Bank, “Personal Remittances, Received (Current US$) — Tonga”, 27 February 2023,; The World Bank, “Remittance Prices Worldwide: Sending Money from Australia to Tonga”, 27 February 2023,; and Lowy Institute, Pacific Aid Map, 2023, accessed 31 July 2023,
Note: The World Bank provides average cost data for specific corridors such as Australia–Tonga or United States–Tonga, not the global average of corridors to Tonga. The outward-bound average from Australia to specific Pacific Island nations has been used in these calculations ( All calculations are best estimates given they are based on averages and data on remittance receipts supplied to the World Bank ( World Bank remittance data (currencies) are expressed in US$.
The World Bank, “Personal Remittances, Received (Current US$) — Vanuatu”, 27 February 2023,; and The World Bank, “Remittance Prices Worldwide: Sending Money from Australia to Vanuatu”, 27 February 2023,
Roland Rajah and Alexandre Dayant, Avoiding a Pacific Lost Decade: Financing the Pacific’s Covid-19 Recovery, (Sydney: Lowy Institute, 8 December 2020),
Wise and London School of Economics, “2022 Remittances Report: Can G20 Sending Countries Achieve the UN Goal of 3% Costs by 2030?”, November 2022,
Australian Competition and Consumer Commission, “Australians Paying Millions Too Much for Foreign Currency Services”, 2 September 2019,
Australian Competition and Consumer Commission, Foreign Currency Conversion Services Inquiry: Final Report, July 2019, (Canberra: ACCC, 2019),
By 2021, three prominent remitters only partially disclosed their fees and “12 out of the 15 prominent remitters reviewed were either adhering to best practice price disclosure or needed to make only minor improvements to achieve best practice”. See Australian Competition and Consumer Commission, “Money Remitters Improve Price Transparency after ACCC Inquiry”, 10 August 2021,
Ajay Jagannath, “Remittances: Moving People Move Money”, DevPolicy Blog, 10 February 2020,
Australian Government, Department of the Prime Minister and Cabinet, “Increasing Transparency of Online Foreign Exchange Calculators”, 24 May 2023,
The Behavioural Insights Team, “Sending Money Home: Remitting to the Pacific Islands”, 12 August 2020,,home%20('remitting').
Cultural Pulse, “Baseline Survey Report: Empowering Migrants through Pacific Remittances (EMPR) February 2022”, 45.
Australian Government, AUSTRAC, Department of Foreign Affairs and Trade, “Remittance Corridors: Australia to Pacific Island Countries — Money Laundering and Terrorism Financing Risk Assessment”, 2017,
Reserve Bank of Australia, “Correspondent Banking in the South Pacific,”, Bulletin, June 2023, Global Economy, 15 June 2023,
Ibid. Also see GPFI, “G20 National Remittance Plan: Australia 2021 Biennial Update”.
AUSTRAC, “AUSTRAC Statement 2021: De-Banking”, 29 October 2021,
The World Bank, “Remittances Grow 5% in 2022, Despite Global Headwinds”, Press Release, 30 November 2022,,Bank%20Migration%20and%20Development%20Brief. GPFI, “G20 National Remittance Plan: Australia 2021 Biennial Update”.
Asian Development Bank, Digital Financial Services in the Pacific: Experiences and Regulatory Issues, (Philippines: ADB, 2016),
Jack Pinczewski and Jonathan Capal, “Three Ways to Reduce Pacific Remittance Costs”, DevPolicy Blog, 24 June 2022,
Philip Lowe, “An Efficient, Competitive and Safe Payments System”, Speech, Reserve Bank of Australia, 14 December 2022,
Tongan Development Bank, “’Ave Pa’anga Pau”,
The World Bank, “Remittance Prices Worldwide: Sending Monday from Australia to Tonga”, 30 March 2023,
Digital transfers occur on electronic platforms, in many cases mitigating the need for cash if the transfer moves from one bank or mobile wallet account to another.
Cultural Pulse, “Baseline Survey Report”, 30.
Mihai Sora, Building the Australia–PNG Digital Ecosystem: Outcomes from the 2022 Aus–PNG Network Emerging Leaders Dialogue, Lowy Institute, (Sydney: Lowy Institute, 15 June 2023),
Australian Infrastructure Financing Facility for the Pacific, “East Micronesia Cable”,
Cultural Pulse, “Baseline Survey Report”, 32.
Nicolas Zoumboulis, “Covid-19 Leads to Huge Growth in Digital Money Transfers to Pacific but Concerns Remain over High Fees”, ABC Pacific, 5 October 2020,
GSMA Intelligence, “The Mobile Economy: Pacific Islands 2023”, Report,
Fiji, Papua New Guinea, Samoa, Solomon Islands, Tonga, and Vanuatu.
GSMA Intelligence, “The Mobile Economy: Pacific Islands 2023”, Report,
India accelerated digital payment adoption by removing high value notes, but also by providing discounts on petrol, diesel and public transport purchases when using digital payments. They offered financial support to roll-out terminal payment devices at micro businesses, alongside tiered caps on how much merchants could be charged for the service, with the government taking on transaction fees on behalf of consumers. See Government of India, “Cashless India: Promoting Digital Payments Among People”,
Vodafone, “M-VATU Mobile Money Transfer: Mekem Laef Easy”, See also Pacific E-Commerce Initiative, “A New Cross-Border Mobile Money Service Launched in the Pacific”, 12 May 2023,
Given differential exchange rates can incentivise shifting transfers as opposed to finding lower transaction fees, it is preferred to lower transaction fees as these are the costs generally passed on to consumers.
Vanuatu’s digital transformation projects were supported by the Pacific Financial Inclusion Programme (PFIP) under the United Nations Development Programme (UNDP) and the United Nations Capital Development Fund (UNCDF). See UNCDF, “Vanuatu Joins Global Call-to-Action on Remittances during Covid-19”, 24 June 2020,
In Australia, AML/CTF rules are legislated under the Anti-Money Laundering/Counter-Terrorism Financing Act 2006 (Federal Register of Legislation, Australian Government, Anti-Money Laundering and Counter-Terrorism Financing Act 2006, 17 June 2021,, which can also be known as Anti-Money Laundering/Combating the Financing of Terrorism, as referenced on the International Monetary Fund’s website, “Anti-Money Laundering/Combating the Financing of Terrorism (AML/CTF)”,
John Coyne, “Exodus of International Banks from Pacific Island Nations Threatens Regional Economic Stability”, The Strategist, 4 November 2022,
Reserve Bank of Australia, “Central Banks Committed to Economic Prosperity and Wellbeing in South Pacific”, Joint Media Release, 29 June 2022,
The Behavioural Insights Team, “The Impact of Improved Transparency of Foreign Money Transfers for Consumers and SMEs: Final Report”, 21 March 2018,
Wise and London School of Economics, “2022 Remittances Report”.
Personal communication, Craig Nodder, Appello Services, 8 August 2022.
Charlotte Bedford, “NZ’s New, Low-Cost Remittance and Savings Mechanism: How to Encourage Uptake”, DevPolicy Blog, 25 March 2021,
Reserve Bank of Australia, “Reserve Bank of Australia Annual Report — 2022: Banking and Payment Services”, 22 August 2023,
Australian Government, Federal Register of Legislation, Reserve Bank Act of 1959,
Jagannath, “Remittances: Moving People Move Money”.
Timothy Lyman, Matthew Soursourian, Louis De Koker, Chrissy Martin Meier, CGAP Blog, “Collaborative Customer Due Diligence: New Ways Forward”, 4 October 2018, See also Magdi Amin and Louis De Koker, “CGAP, “A Vision for Collaborative Customer ID Verification in Africa”, 12 November 2019,
NSW Government, “Putting You in Control of Your Identity”,
In Nigeria, for example, the tiered system has allowed low-risk consumers to access simplified KYC requirements, which are translating into cost savings by avoiding the need to present, verify, and store paper-based documentation. By 2018, more than ten million records were stored on the national identity database for KYC purposes and were accessible by banks and mobile money operators. See Alliance for Financial Inclusion, “Inclusive Financial Integrity: A Toolkit for Policymakers”, July 2020,
Pinczewski and Capal, “Three Ways to Reduce Pacific Remittance Costs”.
Minister for Foreign Affairs, Senator the Hon Penny Wong, ”Telstra Finalises Acquisition of Digicel Pacific”, 14 July 2022,
See, for example, Moorup, “About Us”,
Sora, Building the Australia-PNG Digital Ecosystem.
Australian Government, Department of Foreign Affairs and Trade, “Joint Statement on Partners in the Blue Pacific Foreign Ministers Meeting”, Media Release, 22 September 2022,
PACER Plus Implementation Unit, “Constraints and Opportunities in Pacific Remittance Data”. See “Remittance Figures for Pacific Not Accurate, New Report, RNZ, 19 July 2023,
Pinczewski and Capal, “Three Ways to Reduce Pacific Remittance Costs”.
See Financial Stability Board, “Enhancing Cross-Border Payments: Stage 3 Roadmap”, 13 October 2020, Measures include standardisation of licensing and supervisory requirements, support for better data portability, and consumer protection legislation. See Oya Ardic, Hemant Baijal, Patrizia Baudino, Nana Yaa Boakye-Adjei, Jonathan Fishman, and Richard Audu Maikai, “FSI Insights on Policy Implementation, No 43 : The Journey So Far: Making Cross-Border Remittances Work for Financial Inclusion”, Financial Stability Institute of the Bank for International Settlements and World Bank Group, June 2022,
Areas of expertise: Aid to Pacific Islands, Pacific development policy, Pacific women’s development, Pacific Island politics, remittances.