Methods for sending remittances home to poor families in the South Pacific and Asia need work by Australian and New Zealand banks, as the costs of doing so remain high, a World Bank
study has found.
Fees often exceed 10 per cent of the value of money being sent home to the Pacific, the study found.
"The remittance costs through banks remain stubbornly high, for example, on average, costing A$38.30 to remit A$200 from Australia to the Philippines," the study said.
"Bank fees account for 70 percent, and exchange-rate margins make up the remainder [of the remittance fees]."
"In addition, [recipients] continue to incur higher opportunity costs. It takes nearly three to five days on average for banks to make remittances available for recipients, while it is instant for most [other commercial transfers]."
The study said that remittance costs, on average, were declining worldwide and were 1.5 percentage points lower compared with 2009. Even so, these costs were still in the order of nine per cent.
Reducing remittance costs is a public policy goal, with the G20 setting an objective of reducing costs to five per cent over the next five years.
The World Bank said remittance costs were falling in high-volume corridors, but "in the smaller remittance corridors [such as the South Pacific] costs continue to be exorbitant."
Demand for remittances is likely to grow.
The number of people from the East Asia and Pacific region living outside their countries of origin increased by nearly 60 per cent over the 14 years to 2013.
Remittances are expected to increase by seven percent to US$115 billion in 2013, and to US$154 billion by 2016.
For some Pacific economies remittance flows are of great significance.
The World Bank estimates remittances represent 50 per cent of New Zealand's official aid to Vanuatu and 20 per cent of Vanuatu's total export earnings.
In the case of Tonga, remittances represents 40 per cent of New Zealand's official aid and 44 per cent of its export earnings, the World Bank said.