Babeldaob in detail
Palau's currency is the US dollar. Credit cards are accepted at many tourist facilities in Koror (and at a few places on Peleliu) but often attract a 3% to 5% fee on transactions.
There are ATMs at Bank of Hawaii, Bank of Guam and Bank Pacific in Koror, which can be used for international withdrawals.
Note that foreign currency exchange is a hassle, so try to bring US dollars cash. Only Bank of Hawaii will change money in most major currencies. It charges US$10 per transaction.