AUCKLAND, December 1, 2008- Today Westpac New Zealand have lowered their remittance transaction fees in a move which will financially benefit many Pacific Islanders. This is great news for Pacific countries, many of whom depend heavily on remittances as a primary source of income.Westpac have 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 fees range between 15%-50%. Westpac has reduced transaction costs to just three to 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 accounts.
"The cash that immigrants send home is a vital source of income for the development in Pacific countries," 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 financial institutions will bring their fees into line with international best practices which is considered around five percent or lower on each transaction."
The importance of remittances is particularly evident in Tonga, where they constitute over thirty percent of GDP.
This is a remarkable first step on behalf of Westpac which is expected to lead to a ripple-out effect with other major banks and regulatory authorities in New Zealand and Australia.