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From paper-based to electronic payments in the Pacific Islands: How and by how much would Tonga benefit in the transition process?
Journal of Payments Strategy & Systems,
10
(1),
84-95
(2016)
Abstract
Efficiency gains due to migration to lower-cost retail payment instruments could entail significant benefits to economic development and financial inclusion. This paper uses Tonga as a case study in order to examine savings that could be achieved in three main areas of payment systems reforms in the process of transitioning from paper-based to electronic payment instruments: remittances, government payments, and overall payments infrastructure and interoperability. Assuming an upfront cost and constant annual savings due to reforms, the paper projects an initial fixed cost of modernising the payments infrastructure of 0.5 per cent of the current GDP, and net savings of up to 3.2 per cent of the current GDP in ten years for Tonga.
Keywords: Tonga; cost of cash; remittances; savings; electronic payments
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Author's Biography
Holti Banka is a PhD candidate at the School of Public Policy, University of Maryland, focusing on International Development and Economic Policy. He has been involved with projects at the World Bank Group on payment systems. His academic research looks at the cost comparison of using different payment instruments, and at financial inclusion. Holti Banka received his BA in Economics and Mathematics from Williams College, and his MPP from the University of Maryland.
Carlo Corazza has been working as Senior Payment Systems Expert in the Financial Infrastructure and Inclusion Practice of the World Bank since 2007. He has undertaken several missions of market assessment for payments and remittances. Prior to joining the World Bank, Mr Corazza worked as Local Economic Development Expert for the United Nations Development Programme in Guatemala and Serbia, and as an attaché at the Italian Mission to the United Nations in New York.
Balakrishnan Mahadevan is currently with the Payment Systems Development Group, World Bank, helping multiple developing nations improve their financial market infrastructure. Prior to that, he was Chief Operating Officer of the National Payments Corporation of India for three years. He has over 25 years’ banking/ technology experience with banks such as ABN AMRO Bank, Barclays, and Citibank. He is a postgraduate in Business Administration (MBA) and in Bank Management (MBM), and a PhD holder in Financial Management/Payments.
