The Iraqi government is mandating digital payments, a move strongly promoted by banks. But many Iraqis, like Shaimaa and Muhammad, remain hesitant, expressing fears they might lose their money in the transition. The questions remain: are Iraqis truly ready for this shift? Why are some people afraid of losing their money? How have hidden fees, unexpected "tips” and fraud schemes become new obstacles to digital transformation and cashless systems?

In the first ten days of February 2025, the Central Bank of Iraq issued instructions to increase bank card fees. The cost to issue a salary card for the first time rose to 15,000 Iraqi dinars (approximately ten US dollars), up from 10,000 dinars, (around eight US dollars). Replacing a damaged Mastercard now also costs 15,000 dinars (approximately ten US dollars). Additionally, the commission that is charged for withdrawing cash using point-of-sale (POS) terminals has doubled, increasing from 1,000 dinars (around one US dollar) to 2,000 dinars (about two US dollars) per million dinars withdrawn. 

Despite these challenges, Iraq is undergoing a significant transformation in the realm of digital payments. Both public and private banks have started adopting digital payment systems, and people are increasingly turning to these electronic methods for daily transactions. 

However, while it could be considered a step forward, this shift towards electronic financial dealings is not without difficulty. Iraq still faces several obstacles that could affect a smooth transition away from its traditional, cash-based culture towards a widespread digital payment ecosystem.  

Historically, Iraq entered the digital financial space nearly half a century behind global developments. Although Al-Rafidain Bank began offering credit cards to citizens as early as 2003, their usage remained extremely limited. Cash transactions continued to dominate the economy until 2007, when the promotion of Qi Card system began. 

For context, the American company Diners Club launched the world’s first credit cards in 1950. By 1958, plastic credit cards like American Express and Visa had appeared. These technologies gradually evolved over the following decades, introducing innovations such as ATMs, global digital banking networks for example SWIFT and the rise of remote digital shopping companies such as PayPal, long before such systems gained traction in Iraq.  

Regionally, Iraq’s adoption pace is slower compared to its neighbours. ATMs appeared in Saudi Arabia and the United Arab Emirates (UAE) during the 1980s. By the 1990s, these countries had adopted international digital networks such as Visa and MasterCard. The UAE moved quickly to develop its systems, launching the eDirham gateway in 2001 to facilitate government transactions. 

In contrast, digital payment methods began to emerge more recently in Iraq. A key step was the establishment of the International Smart Card Company in 2007, working with the public sector to launch the biometric Qi Card project.  

Further infrastructure development followed in 2008 when the Central Bank of Iraq began automating its commercial operations and introduced the Iraq Payment System. This system records all currency issued by the Central Bank and the Ministry of Finance, aiding liquidity control. Its objectives also included reducing cash usage, bridging geographical gaps between bank branches and lowering money transport risks. Later, between 2016 and 2018 the International Development Bank (IBD) obtained licenses from both Visa and MasterCard to issue and manage bank cards, becoming the first Iraqi bank to be authorised by these global companies. 

Iraq’s relatively slow progress in this field can be attributed to the economic crises and security issues the country experienced during preceding decades. However, with the relative stabilisation of the situation more recently, the government began actively encouraging the use of digital payments. 

One such initiative came in 2020 when the Central Bank of Iraq introduced the Electronic Collection Law for Housing Funds. This law targeted ministries and revenue-collecting departments which generated their income through bills and fees, with a particular focus on the Iraqi Housing Fund, aiming to streamline payment collection electronically.  

As digital financial transactions grew, in 2023 the Central Bank of Iraq decided to establish the National Company for Electronic Payment Systems. This entity is tasked with developing, operating and managing the country’s national digital payment infrastructure.  

This focus on enhancing digital payment systems reflects broader government goals: gaining better control over the cash supply, combating corruption, reducing the need to print local currency and simplifying the process of localising public sector salaries (ensuring salaries are paid into local bank accounts). 

Cultural challenges 

Despite infrastructure development, one of the biggest challenges remains the deeply rooted habit of using cash for transactions. Although Iraq ranks highly in mobile phone and internet penetration, digital financial literacy among its citizens is still relatively low.  

Statistics highlight this gap. According to the Iraqi Private Banks League, the number of bank cards issued in Iraq reached approximately 18.5 million by September 2023, with Central Bank Governor Ali Al-Alaq stating that two million new cards were issued in the preceding year alone. However, the actual use of these cards is often limited and confined to specific transaction types. For many Iraqis, the mechanics of using digital payment methods remain unclear, with understanding varying significantly across urban and rural populations. 

This apprehension is voiced by citizens like Siham Raji Al-Atabi, a 42-year-old resident of Baghdad. Recalling her experience paying for a digital passport at an official booth, she expressed common fears:   

 
“I know what these cards are, but I get anxious when I use them. I’m afraid I’ll press the wrong button and lose the money!” 

According to Al-Rafidain Bank, by the end of 2023, 1,395 government departments were using the digital payment collection system, a significant increase compared to just 13 departments in 2019 and 558 in 2021. 

The Iraqi government’s push to use POS devices has tangible financial results. However, following the mandate compelling citizens to obtain digital payment cards for government transactions, the total amount collected through the government’s digital system reached approximately six trillion Iraqi dinars in 2024. This marked a sharp rise from 418.3 billion dinars (approximately 319 billion US dollars) collected digitally in 2023.   

According to the Central Bank of Iraq’s Department of Information Technology and Payments, overall financial transaction volumes processed digitally have also surged. These grew from 298 billion dinars in 2019 to approximately 9.8 trillion Iraqi dinars (around 7.6 billion US dollars) in 2024.  

The policy driving this shift, implemented starting June 2023, extended beyond state institutions. It actively encouraged private educational institutions, fuel stations, retail shops, restaurants, pharmacies, private clinics and pharmaceutical distributors to adopt digital financial practices. While allowing some of these entities to continue accepting cash, the government incentivized the move to digital by offering tax exemptions on transactions conducted through digital payment channels. 

A specific focus has been placed on pharmacies. In January 2025, Adnan Al-Arabi, Deputy Head of the Government Communications Team, held meetings with the Minister of Health and the Pharmacists’ Syndicate to coordinate the introduction of digital payment systems across Iraq’s approximately 17,000 pharmacies. While citizens are not obligated to pay by card, POS devices are now mandatory in all pharmacies, which must display visible stickers indicating their availability.   

These steps were intended to combat bribery and corruption and regulate the state’s financial resources more effectively. Yet, despite all the infrastructure development and incentives, a significant gap remains in public awareness and digital literacy required for citizens to comfortably and effectively use these new systems.  

The challenges of building security awareness 

The challenges to building a digital payment culture in Iraq extends beyond basic used confusion. A widespread lack of security awareness is a critical issue affecting individuals, service providers and agents alike.  

Shaimaa Abdul Ali Al-Jubouri, a government employee, experienced a situation highlighting the dangers of this lack of security awareness. She gave her PIN to a payment agent so he could withdraw her salary, a common practice in Iraq. The agent initially told her the card had no balance. Moments later, Shaimaa received a text message confirming the salary deposit. When she returned and confronted the agent, threatening to involve the police and request surveillance footage, he handed over the money.  

This practice occurs despite being illegal. Digital payment companies regularly send warning texts urging users not to share their PINs with anyone. Furthermore, Article 27 of the Iraqi Cabinet’s 2024 directive mandates that agents must follow information security procedures and maintain user data confidentiality and privacy. Nevertheless, weak banking awareness means compliance is limited, and verbally giving one’s PIN to machine operators remains widespread particularly at currency exchange and government offices such as those issuing national IDs and passports.  

Adding to these security risks is another illegal and unusual phenomenon: renting digital payment cards. Citizens lacking their own bank cards sometimes resort to renting one from intermediaries who are often found inside or outside government offices to complete transactions, usually for an unspecified fee. The cost for renting a card inside a passport office typically ranges between 1,000 and 3,000 Iraqi dinars (approximately one to two US dollars) but can reach up to 5,000 dinars (about four US dollars) at some fuel stations. 

These practices constitute unlawful exploitation and carry legal risks for both the card owner and the renter if the card is misused. Consequently, some government departments have begun requiring personal guarantees, such as holding onto transaction receipts or ID cards, to mitigate the risk of rented cards being used improperly. 

Such practices inevitably fuel a black market. Some brokers operating outside official offices have started renting cards for as much as 10,000 dinars (approximately eight US dollars) and often impose extra charges just to deposit funds onto the card. For instance, the Unified ID Department charges citizens 6,000 dinars (approximately five US dollars), to issue the card. Yet, some brokers demand an additional 2,000 dinars (around two US dollars), simply to handle deposit, another layer of exploitation targeting citizens navigating the new system. 

Scams and fraud linked to digital payments are becoming increasingly common in Iraq. For example, Colonel Aziz Nasser recounted, in an episode of his show Call Number One, the story of a woman who got scammed while booking a service through an Instagram page. She transferred 730,000 dinars (around 700 US dollars) to secure a reservation, only to discover the page was fake, impersonating a legitimate company. 

In another incident from the same programme, a woman seeking financial aid for her disabled mother contacted a social media page purportedly run by a Gulf princess. The scammers later lured her to an unlicensed mobile phone shop where supposed staff photographed her official IDs. These documents were then used to purchase two SIM cards and link them to Zain Cash accounts, facilitating further fraudulent activities. Months later, the victim herself faced legal charges for fraud, despite being unwittingly exploited.   

Stories like this are widespread in Iraqi society, underscoring a severe lack of public awareness regarding safe interactions with evolving banking and digital financial systems. 

Security breaches 

Beyond usability and cultural habits, a significant deterrent to digital payment adoptation in Iraq is the fear of security breaches. Many Iraqis avoid depositing money into their bank accounts, worried that either their personal accounts or the banks themselves could be hacked.  

Basim Ali Al-Nasiri is one of these citizens. He explained that he deposits only limited amounts needed for essential uses, such as refuelling his car or completing government transactions. At other times, he turns to offices that offer payment services on his behalf in exchange for a commission. He justifies this by saying that paying extra fees is still better than risking losing his money through a security breach. 

Commenting on these widespread fears, Ali Mustafa, an information security consultant and founder of GRE PATH, a company specialising in compliance, auditing, and information systems, stated: 

 
“There are no completely secure systems. But most Iraqi banks, based on the Central Bank’s regulations, are working toward achieving security levels that match the growing cyber threats.” 

In March 2024, the Central Bank of Iraq stressed the importance of adopting top-tier systems and international standards for digital payments, allocating millions of dollars to develop technical infrastructure. Additionally, a 2024 Cabinet decision mandated  strengthening the security of electronic payment systems by implementing best practices in information security and combating related threats. 

Despite these governmental and institutional efforts, many citizens still share concerns similar to those of Basim Al-Nasiri. A widespread belief remains that digital systems are more vulnerable to hacking or fraud, mainly fueled by lack of public awareness regarding cybersecurity practices for digital transactions. These fears understandably lead to hesitation in fully embracing digital payment services. 

However, these concerns can be addressed. According to Mustafa, in his statement to Jummar, the risks of breaches can be significantly reduced and users’ financial data can be better protected by following the guidance of financial institutions and relevant government bodies. Key practices include avoiding suspicious links, ignoring unsolicited calls or messages requesting passwords or personal information, and using trusted cybersecurity applications and software. 

Concerns over fees 

Excessive fees represent a primary reason why many Iraqis hesitate to fully adopt digital financial services. While the Central Bank has mandated that no commission should be charged to citizens or merchants when using POS devices for payments, this directive overlooks the fees often imposed on individuals for cash withdrawals and deposits. 

This lack of transparency contravenes the law. Article 13, Section 2 of the Digital Payment Services Law clearly states: 
 

“Service providers must disclose the details of electronic payment services and their associated fees to the customer, including any commissions tied to those services.” 
 

Despite this legal requirement, banks often fail to inform citizens about the nature of these deductions, whether at the time of payment or deposit. Meanwhile, agents charge varying rates depending on the amount involved. 

Muhammad Rasool, 37, shared his personal experience: “When I withdraw my salary, I have to pay a 3,000-dinar fee” (approximately two US dollars). He also pays additional charges when depositing money to pay for services like fuel.  

 
“That’s why I stopped withdrawing my full salary. I leave part of it in the account to use at fuel stations or for official transactions, just to avoid the extra fees.” 

Muhammad believes the solution lies in distributing ATMs more widely, mirroring practices in other countries, to ease the financial burden associated with digital banking. 

His suggestion highlights another significant obstacle: the poor state and availability of ATMs. Many citizens are unable to withdraw their money because ATMs are out of cash or out of service. Sometimes, cards get stuck inside malfunctioning machines, forcing users to visit the bank to retrieve them. This situation points to inadequate maintenance, infrequent updates and lack of convenient alternatives, as ATMs remain relatively scarce and are often located far apart. 

Recognising this issue, in January 2025 the Central Bank’s media office announced plans to expand the nationwide network of ATMs. 

Many merchants also face financial disincentives. Although the government reduced transaction fees from two percent to one percent, some business owners still consider this rate prohibitively high. Additionally, the Trade Bank of Iraq remains the only bank that allows merchants to open credit accounts, but it requires collateral exceeding 100 percent of the credit value. 

These difficulties lead some to seek alternatives outside of Iraq. Salam Ghanem Al-Rubaie, a wholesale trader, explained that he primarily uses digital payment cards issued by foreign banks, such as those in Turkey and Jordan. He cited lower fees, better customer service from bank staff and faster transaction processing times as key reasons for his preference over Iraqi banking options. 

Unofficial tips 

Beyond official fees, another frustration arises from the demands sometimes made by service agents for unofficial tips. This is particularly acute with workers at fuel stations who may ask customers for extra cash payments.  

Khalid Abdulrahman Al-Zubaie, a 33-year-old taxi driver from Baghdad, said that some fuel station attendants ask for amounts ranging from 1,000 to 5,000 dinars (approximately one to four US Dollars) in cash. He noted that they are even willing to cause trouble with customers to get these tips, despite official regulations aimed at eliminating such harmful practices. 

In response to these issues and to promote cashless transactions, the Ministry of Oil announced plans at the beginning of 2024 to install digital payment stands at fuel stations, moving toward the complete digitalisation of fuel purchases. 

However, some workers defend the practice of requesting tips. Ameer Al-Aboudi, a fuel station worker in Baghdad, argued that attendants work eight hours a day in all weather conditions to serve the public.  

 
“These amounts are modest for the kind of effort we put in,” he stated. When asked about taking tips despite receiving a state salary, he responded that his salary of 500,000 dinars  (approximately 400 US dollars) is insufficient to cover living costs. 

Another significant drawback reported by users is the delay and difficulty in receiving bank cards after applying through designated mobile applications. Inas Rasheed, from Salah Al-Din, shared her experience: 

 
“I applied for a bank card through a digital app. A delivery staff member called me, but I couldn’t answer then. When I called him back an hour later, he told me he had already returned to Baghdad and that I needed to contact the company’s customer service.” 

And that’s precisely what she did. Inas reached out to the bank multiple times via phone and social media, but the response was consistently unhelpful: 
“Your request is under review.” 
Two months later, she was still waiting for this mysterious review process to conclude, with no clear end sign. 

Possible solutions  

Addressing the existing problems requires a multi-faceted approach. According to Ahmad Muhayman, a financial and banking sciences researcher, increasing public engagement starts with improving the digital economic infrastructure, specifically by installing dedicated ATM networks and distributing them based on in-depth studies carried out in coordination with multiple ministries. 

Achieving this requires effective collaboration between the Central Bank, the Ministries of Finance and Communications (to ensure reliable network connectivity) and the Ministry of Housing (to identify suitable locations for ATM stations). Additionally, population distribution statistics from the Ministry of Planning must inform the placement strategy. 

Muhaymen also emphasised the importance of maintaining these ATM units to ensure continuous operation. Beyond infrastructure, encouraging citizens to adopt digital payments requires responsive customer service to handle complaints promptly, eliminating extra fees on financial transactions and implementing a reward-based points system to incentivise digital payment tools. 

On the security front, Ali Mustafa, an information security consultant, stressed the need for banks to comply with international standards such as ISO 27001. 

 
He told Jummar that following the Central Bank of Iraq’s cybersecurity regulations and ICT governance guidelines was crucial. This includes training banking staff, running cybersecurity awareness programmes, using advanced protection systems and developing newly established information security departments.