The following is a fintech and wider digital economic development view of Pacific Nation Tonga.
Few countries depend on money sent home quite like Tonga. Across Australia, New Zealand, the United States and elsewhere, Tongans working abroad regularly transfer part of their earnings back to relatives in the Pacific kingdom. That money pays for groceries, school fees, electricity, housing and countless other everyday expenses.
Remittances are consequently not a peripheral part of Tonga’s financial system. They are one of its foundations.
This gives fintech a particular purpose in the country. Tonga does not need technology simply to make banking more convenient. It needs digital finance to make one of its most important economic lifelines cheaper, faster and more resilient.
An economy connected to the world by its people
Tonga is home to around 100,000 people spread across more than 170 islands, although only a fraction are permanently inhabited. Nuku’alofa, on Tongatapu, is the economic and financial centre. Tourism, agriculture, fisheries, construction, government services and remittances underpin the economy, while Bank of South Pacific (BSP), ANZ and Tonga Development Bank are among its important financial institutions.
Economic growth reached 2.7 per cent last year, supported by reconstruction, tourism, remittances and grants. Growth is projected to moderate to 2.3 per cent this year as reconstruction spending normalises.
Tonga’s problem is not simply its size. Its geographic isolation, outward migration and vulnerability to natural disasters make delivering financial services considerably more difficult than in larger economies. That is precisely where fintech becomes useful.
The diaspora is part of the domestic economy
Remittances are unusually important to Tonga. Large Tongan communities live in New Zealand, Australia and the United States, creating financial connections between households in Tonga and relatives thousands of kilometres away.
The International Monetary Fund (IMF) continues to identify strong remittance inflows as an important driver of domestic demand and Tonga’s economic recovery. Fintech can change what happens between someone pressing “send” in Auckland and a family member receiving the money in Tonga.
Traditional remittance channels can involve relatively high fees and physical collection. Digital wallets can potentially deliver money directly to a mobile telephone, allowing the recipient to store, transfer or spend it without immediately converting everything into cash.
In Tonga, improving remittances is therefore one of the clearest ways fintech can have a direct impact on household finances.
Then the connection disappeared
Neiafu, Vava’u Island. Port of Refuge, Kingdom of Tonga. IMAGE SOURCE GETTY
Tonga also provides an important warning about becoming dependent on digital finance.
The Hunga Tonga-Hunga Ha’apai volcanic eruption and tsunami in January 2022 caused catastrophic damage and severed the country’s main undersea telecommunications cable.
For a country reliant on international financial flows, losing connectivity was not merely an inconvenience. It demonstrated that digital payments are only as resilient as the telecommunications infrastructure supporting them.
The disaster has subsequently shaped Tonga’s wider economic recovery. The IMF notes that the country has steadily recovered from the combined shocks of the pandemic and volcanic eruption, but remains exceptionally vulnerable to natural disasters and external disruption.
For Tonga, fintech development must therefore go hand-in-hand with resilient telecommunications, backup systems and disaster preparedness.
MyCash brings the wallet to the telephone
One of the clearest examples of fintech operating in Tonga is MyCash, provided by Digicel. The service allows customers to receive, store and spend money through their mobile telephone. Users can deposit and withdraw funds, transfer money and purchase airtime without requiring conventional branch banking.
Importantly, MyCash is available through both a smartphone application and USSD using *888#, making the service accessible to customers without smartphones. That matters in a country where fintech must work beyond affluent, digitally sophisticated consumers. Digicel took another step in June last year by introducing a two-tier Know Your Customer (KYC) system for MyCash.
Customers without conventional formal identification can register initially using basic information including their name, address, occupation and photograph. According to Digicel, the initiative was specifically designed to reduce barriers preventing some Tongans from accessing digital financial services.
It is a relatively simple regulatory change, but potentially an important one. A digital wallet cannot improve financial inclusion if the people it is designed to reach cannot satisfy the requirements needed to open it.
The central bank’s role is changing too
The National Reserve Bank of Tonga (NRBT) sits at the centre of the country’s financial modernisation. Its responsibilities increasingly extend beyond supervising banks towards ensuring that payment infrastructure remains secure, efficient and accessible.
For Tonga, this requires balancing innovation with consumer protection and financial stability. Mobile money can improve access, but customers also need confidence that providers safeguard their funds. Digital remittances can lower costs, but regulators must continue addressing money laundering and fraud risks.
The country’s small financial market makes this balancing act particularly important. A serious failure at one provider could affect confidence across the entire digital ecosystem.
Financial inclusion means reaching beyond Nuku’alofa
Tonga’s fintech opportunity becomes clearest away from the capital. Operating conventional bank branches across sparsely populated islands is expensive. Mobile financial services offer a fundamentally different model.
A telephone can become a payment device, remittance account and basic financial-services channel without requiring a permanent physical bank branch nearby. Yet access still depends on reliable mobile coverage, affordable data, sufficient agent networks and digital literacy. This means Tonga’s fintech transformation will not be measured simply by how many people register for mobile wallets. The more meaningful question is how frequently they actually use them.
The future
Tonga will never need hundreds of fintech start-ups. Its priorities are far more practical: cheaper remittances, accessible mobile money, resilient payment infrastructure and financial services capable of reaching communities beyond Tongatapu.
MyCash demonstrates how technology can lower some of those barriers. The experience of the 2022 eruption demonstrates why resilience must develop alongside convenience. For Tonga, fintech’s greatest achievement would be remarkably simple: ensuring that money sent home can reach a family quickly, affordably and reliably-even when living thousands of kilometres from the person who earned it.
