The Opportunity for Digital and E-commerce Payments in the Pacific Region
Pacific Island countries have unique demographic attributes characterized by low and scarce populations and high migration rates. Due to this, the economic heft of the Pacific Islands is also limited, with a cumulative regional GDP of USD 32 billion (GDP per capita of USD 3,600) as of 2020, as compared to neighboring Australia with ~USD 1.3 trillion (GDP per capita of USD 51,812).
The Pacific Islands are also one of the least densely populated regions in the world, with ~34 people per square kilometre. Apart from the demographic constraints, the Pacific Island countries have limited natural resources and a large proportion of the Pacific Islander population living overseas in Australia and New Zealand, thus leaving the region highly dependent on inward remittances.
Despite efforts taken by individual Pacific Island countries to develop payments infrastructure, several challenges have constrained progress. Firstly, the demographic challenge of small and scarce populations, characterized by low economic resources and poor financial and technology literacy rates, has limited the uptake of newer technologies.
Secondly, the ecological fragility of the countries’ locations makes infrastructure projects such as undersea data cables challenging. Thirdly, the current payment infrastructures are not interoperable, making cross-border transactions highly cumbersome. Finally, a lack of uniform regulations to govern digital payments, rigid existing regulatory requirements, and the lack of ancillary regulations covering areas such as data privacy and cybersecurity further exacerbates the challenge and has left one-third of the region’s population lacking access to formal financial services.