1. Decreasing the Cost of Remittances in the Pacific In partnership with…

2. Legislation+infrastructure+product = robust customer growth 2 LEGISLATION - PAYMENT SYSTEM, AML, PRIVACY, REGULATIONS - MOBILE MONEY, ELECTRONIC TRANSACTIONS, KYC ETC, INFRSTRUCTURE RTGS, ACH, INTEROPERABLE SWITCHES CARD ISSUANCE AND MANAGEMENT TELECOMMUNICATIONS EFTPOS, ATM, AGENTS, PRODUCTS DEBIT CARDS, MOBILE BANKING, MOBILE MONEY, BANKING SERVICES, AGENCCY SERVICES Customer base CUSTOMER BASE EXPANSION IS PREEDICATED ON INFRASTRUCTURE AND PRODUCT

3. Options for Remitters in the Pacific are limited Informal Sector sending money by relatives etc – simple process, local language and safe, last mile (note many customers from our research have tried the formal sector but for various reasons have reverted. Note these customers tend to use the bank FX rate to calculate the FX MTOWestern Union, MoneyGram etc – easy to use, high market awareness, secure, last mile, exclusive arrangements Debit CardsBank accounts offshore and send the debt card home to access the ATM / EFT Banks remittances Bank remittances – process is more cumbersome than MTO. Limited to bank ATM/branch networks – does not go last mile Internet transfer solution Require to use bank account in Australia/NZ, AML, access to internet in send and receive country – permanent migrants vs migrant workers 3

4. Case Study: Western Union Sending Money to Samoa 4 Sending Country Sending Amount FeeExchange rate (09/11/11) Local currency received (WST) Migration Stocks (PICs)* Australia200 AUD20 AUD2.3086657461.73135,900 New Zealand 260 NZD14 NZD1.7419047452.90123,855 USA207 USD10 USD2.2112991457.74140,856 *bilateral migrant stocks from PICs in respective countries 2010 (WBG) As a proxy for migrant remittances this shows three channels, of approximately the same size, with very different fee and FX costs

5. There are four cost lever points 5 Sending Fee Wholesale FX Domestic Distribution Collection Fee TOTAL COST COST ELASTICITY MTO PRODUCTS KYC EDUCATION MAJOR REVENUE SOURCE FOR BANKS – 100% OF FX NOT WELL UNDERSTOOD BY REMITTERS BANKS LIMITED REACH EXPENSIVE LOW COST DOMESTIC REMITTANCE (m) INREASED ATM/EFT LAST MILE – MAY NEVER BE CHEAP THE NEXT MILE COULD BE

6. Some Future Interventions Sender Country Initiatives – reduce the sending fee MTO products, public-private sector dialogue, transparency, education, efficient regulation Receiving Country Initiatives – create a 1 st world infrastructure Regulation, interbank clearing (Automated Clearing / RTGS) Create meso infrastructure – Switches, card issuance Inter-Operability, more ATMs, EFTPOS, More Cards, Mobile Financial Education – understanding of the costs and options Links with Money Pacific, ADB, PFIP Gender Links with PMI Gender Strategy work underway and WBG Gender and Investment Climate Reform Assessment work Data – better understanding of the costs and issue and transparency Links to Austrac Links RBNZ statistics/ CB reporting 6