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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?

Author

Listed:
  • Banka, Holti

    (Financial Sector Specialist, World Bank, USA)

  • Corazza, Carlo
  • Mahadevan, Balakrishnan

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.

Suggested Citation

  • Banka, Holti & Corazza, Carlo & Mahadevan, Balakrishnan, 2016. "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, Henry Stewart Publications, vol. 10(1), pages 84-95, March.
    • Handle: RePEc:aza:jpss00:y:2016:v:10:i:1:p:84-95
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    More about this item

    Keywords

    Tonga; cost of cash; remittances; savings; electronic payments;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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