Lower Remittance Fees Help the Poor

Contact:
In Sydney: Aleta Moriarty
+61 2 9235 6563
amoriarty@worldbank.org

AUCKLAND, December 1, 2008 —Today Westpac New Zealand has lowered its remittance transaction fees in a move which will financially benefit many Pacific Islanders. This is great news for Pacific countries, for whom remittances are a primary source of income.

Westpac has teamed up with Visa International to offer a remittance card which will allow Pacific Islanders working in New Zealand to send money back home at a significantly lower rate. Currently, remittance costs range between 15 and 50 percent. Westpac has reduced transaction costs to under four percent. This agreement will see Pacific Islanders receiving more of their own money, making a major contribution to poverty alleviation efforts.

The lower fees are a result of regulatory reforms in New Zealand which have enabled customers to list a dependent family member on their bank accounts.

“The money Pacific Islanders send home is vital to the socio-economic wellbeing of these small nations,” said Dr. Manjula Luthria, Senior Economist for the World Bank’s Pacific office. “This is a groundbreaking move that will put more cash in their pockets.”

“However, more needs to be done and I hope other providers will bring their fees into line with international best practice, which is considered to be in the range of one to five percent on each transaction.”

The importance of remittances is particularly evident in Tonga, Samoa, Fiji, and more recently Vanuatu, where these transactions are the number one source of income.

This is a remarkable first step on behalf of Westpac which is expected to lead to a ripple-out effect with other major service providers and regulatory authorities in New Zealand and Australia.