KEY POINTS:
The Cabinet has intervened to make it easier and cheaper for people to send money to relatives in the Pacific Islands.
The changes will mean the recipients will end up with more cash in their pockets.
Remittance charges people pay to companies like Western Union and Money Express are to be cut as a result of a new Government regulation introduced under the Financial Transactions Reporting Act.
Around 75 per cent of Pacific people send money home and Prime Minister Helen Clark said the high cost - anywhere from 15 to 25 per cent of the value of the transaction - would be reduced to a goal of 5 to 7 per cent by next year.
"We want a more competitive remittance market between New Zealand and the Pacific region, greater transparency, wider use of formal channels and better informed consumers," she said.
Under the new system, money will be loaded on to a remittance account by the sender. The recipients in the Islands will access the funds using a card at an automatic teller machine.
Niusulu Hellesoe, who regularly sends money to Samoa, said the new regulation would be welcomed by many people whose families in the Islands were dependent on the money.
"For people who are pinching pennies a lot, they're going to go with the [company] with the cheaper rates - especially with the costs of everything now. It's great for those families."
Mrs Hellesoe acknowledged convenience was also important and said that knowing there would be more money on the other end made things a lot fairer.
"It's fantastic and it'll be fair. Sending money now will mean up to $30 more back home. I send money with the company that I know is reliable and closest to mum, but if I had it my way, I would be sending it through the one with the lowest rate."
