It’s Sunday morning and I’m looking out from my balcony at Nakede Creek on Taveuni Island in Northern Fiji. I have a cup of Kai Organic Coconut Tea in my hand, one of Fiji’s finest, but what I really crave is a cup of Sigri, from Papua New Guinea, a modest coffee with an earthy and low to moderate acidity.

Remembering the low-toned richness of Sigri, I look online to see how and where I can buy some. I am not disappointed and eventually find one e-commerce platform that sells my little piece of heaven. However, upon closer inspection, I see that the only way to buy it is to do a bulk order and make a payment via bank transfer. Unfortunately, I only want a small amount, so this new information does me no favours.

Half-an-hour of fruitless browsing later, I leave home and hope my luck improves in Suva, the capital, chief port, and commercial centre of Fiji. I would like to use my M-PAiSA mobile money E-Transport card - mine one of 1.2 million deployed - for the 30-minute ferry crossing to Vanua Levu, Fiji’s second largest island, before travelling to Suva from there. Fortune once again is not on my side as to date the closed loop transport payment system provided by Vodafone is only for buses and is not integrated into their M-PAiSA wallet -- you can’t load your e-Transport card from your wallet. This seems a missed opportunity for the mobile operator and is quite surprising as the e-Transport service has been operational since 2017 and M-PAiSA since 2010, the same year Digicel launched their mobile money offering, known as MyCash. I’m sure Vodafone could create an e-Transport sub-wallet which would have the additional benefit of boosting financial inclusion more generally, and this I’m sure is something the Pacific Financial Inclusion Program (PFIP) [1] could give further support to Vodafone through their in-house Innovation Lab.

Continuing my quest for Sigri coffee, the waves rolling under the ferry, I consider what are other challenges/opportunities in the Pacific region payments market, and which could explain, at least partly, why I was not able to order and pay for my coffee bag of joy. Well, for starters, Near-field Communication (NFC) devices and QR code-enabled card readers are limited - this I know from simple observation -- digital merchant payments are not widespread. For this to change there will need to be considerable financial education and behavioural change by both consumers and merchants. Second, and I’m certain that Fiji is not alone in this regard, there are significant challenges with postal address systems and last mile distribution, two cornerstones for retail E-Commerce to be successful. Third, there are no regional payment gateways. While I can access my ANZ Bank ATMs and POS machines, and have a debit card as well as being able to do internet, mobile and phone banking and even transfer funds to ANZ accounts in PNG, Samoa, Solomon Islands and Tonga, I can’t easily or cheaply (so it seems) transfer money to buy my beloved coffee. A few years ago, I could have done a remittance transfer, but since banks have gone through de-risking, many of the Money Transfer Operators have closed their agents.

The challenge that I face of having a cup of Sigri seems curious to me, especially considering that Fiji is a middle-income country and that 70 per cent of all government payments are made through electronic platforms, including pension payments from Fiji’s Superannuation Fund and, in the past, disaster relief funds. Also, clearly, there is an understanding of the opportunity digital financial services offer as the government launched its 4-year flagship digital transformation “digitalFIJI” programme in 2018. Also, the Central Bank of Fiji is going through a national payment system reform, so there will be more efficient retail payments and which will be enabled by interoperability between banks, Mobile Network Operators (MNOs) and other players. From a private sector supply-side perspective - and now walking through downtown Suva - I’m pleasantly surprised by the recent upsurge in the number of mobile money agents (now at 367). Vodafone (the main regional player) has integrated its mobile wallet with both HFC Bank (Bank2Wallet, Wallet2Bank) and Westpac (B2W) accounts and is in the process of starting its first set of digital financial services with HFC by providing consumption-oriented nano-loans to its customers.

So, what are the bottlenecks to regional e-commerce? First, regional regulations and policies are not aligned. Second, there is limited financial education and awareness activities and, thus, little evidence of behaviour change from consumers from using cash to digital payments. When these two points are combined, it is difficult to make a sustainable business case for service providers investing in a regional payment gateways.

A potentially significant use case (to catalyse regional payments) are international remittances. In Fiji, remittances account for 5% of GDP. Inward remittances sent via mobile money jumped from FJ$2.12 million in February 2020 to FJ$9.58 million in November 2020, an increase of 352%. However, the overall value of inward remittances remains fairly constant (FJ$50.2 million in February 2020 and FJ$51.8 million in November 2020) which shows that mobile money partly substituted other remittance channels during the COVID-19 pandemic. This might have been triggered by COVID-19-related health concerns associated with physical cash and/or practical reasons such as closure of remittance outlets due to lockdowns in Fiji and sending countries.

Now, walking through the main thoroughfare of Suva, and closing in on my destination, I’m sure that I’ll find someone selling Sigri coffee. I think, that with positive government movement and greater regional coordination on the one hand and the increasing number of mobile money remittance transactions on the other (and if this is replicated regionally), it would seem there should be an opportunity for a greater volume of regional E-Commerce paymentsand which would get me closer to my bag of Sigri.

Reaching the shop that sells PNG’s best coffee, I spy my quarry.But being a digital nomad and enthusiast, my wallet is filled only with plastic (I, one of a paltry 3% of the population who have a debit or credit card) and not cash. I am left utterly frustrated as the shop has neither an M-PAISA account nor a POS machine. The owner informs me, that he would have to deposit $US20,000 (FJ$40,000) to get a POS machine, that cash payments are faster and more convenient and, that he doesn’t have to worry about fees (with cash).

In summary, while important strides have been made by Fiji and the region overall in recent years, in terms of digital payments and e-commerce, it is quite clear that cash still remains king. As such, I have little choice but to go to an M-PAiSA agent and do a withdrawal rather than pay with my digital wallet if I want to get my beloved Sigri.

I hope, under the newly launched Pacific Digital Economy Programme (PDEP), some the e-commerce challenges that I have faced on my coffee quest can be addressed.

[1] PFIP was jointly administered by the United Nations Capital Development Fund and the United Nations Development Programme, and receives funding from the Governments of Australia, New Zealand and the European Union