Electronic payment: a step towards enhancing financial confidence and reducing corruption.
In light of rapid technological developments globally, the shift to digital payment systems has become a necessity to enhance the efficiency of financial and government services, especially in countries undergoing transitions like Iraq. Iraq’s experience in adopting these digital methods reflects the challenges and opportunities that accompany modernizing financial infrastructure, and their impact on expanding financial inclusion, combating corruption, and ensuring transparency in financial transactions. Through the insights of specialists and practitioners in the field, it is clear that the experience has gone beyond simply replacing cash with bank cards, serving as an incentive for structural changes in economic and administrative policies. However, there is an urgent need to address the technical and organizational obstacles to ensure the success and sustainability of this transformation.
Government employee Wassan Sami confirmed that her experience with electronic payments was generally positive, although the system seemed strange at first, given people’s longstanding habit of using cash for their daily transactions.
She explained to Al Sabah: “At first, electronic payment seemed like a new and unfamiliar system, even though we have been receiving our salaries via the Qi Card for years. However, the transition to using the card for daily payments has greatly facilitated the procedures and made transactions more organized and smooth.”
She added that one of the most significant benefits she has noticed compared to cash payments is convenience and time savings, noting that “money is not lost, and we don’t have to deal with the hassle of spending coins. The procedures are also much simpler; we no longer need to receive a paper receipt or visit an employee. All we need to do is enter the required number, and the payment is completed via card within seconds, which has reduced the time by almost half.” Winner Mohammed Hassan began using an electronic payment card after joining a company that relies on electronic payroll payment in 2024, stressing that his experience has been very positive and beneficial.
Speaking to Al Sabah, he said, “The most important benefit I’ve noticed is the convenience and ease of transactions, whether withdrawing or transferring money, especially with the introduction of Mastercard payments at gas stations, which facilitates the speedy completion of transactions within the station.”
Despite this positive experience, Mohammed noted that he encountered a problem once when he attempted to top up his account with 100,000 dinars via an ATM. However, the transaction failed, and the funds were withdrawn from his account. He added, “I contacted the company, and the issue was resolved within a few days, and my money was returned to me.”
He continued, “I have continued to use the electronic payment card until now, and it has become a major part of my daily life. I never leave the card behind. I use it to purchase credit, fill up fuel, and shop online easily and quickly.”
Dr. Ahmed Hadhal, a professor of economics at Al-Mustansiriya University, believes that Iraq has witnessed a rapid shift toward electronic payments in recent years. This shift began in earnest after 2016 with the decision to localize state employee salaries, paving the way for the widespread use of bank cards and bank accounts. He added that the Central Bank has reinforced this trend through several regulatory measures, including issuing instructions to activate bank accounts, encouraging citizens to use modern payment tools, and linking foreign transfers to the compliance platform, leading to remarkable quantitative results.
He pointed out that recent statistics show that the number of activated electronic cards exceeds 20 million, and the number of active bank accounts exceeds 15 million, with annual transfers via these cards exceeding $6 billion. The financial inclusion rate also increased from approximately 22% in 2020 to more than 45% in 2024, indicating a relative expansion in the banking transaction base, especially after the mandatory use of these methods for public sector employees.
However, Dr. Hedhal pointed out that this digital expansion did not fully translate into a tangible improvement in the quality of banking services or citizen satisfaction. The experience was accompanied by a number of problems, most notably poor service from electronic payment companies, the weak response of commercial banks to digital transformation requirements, and the imposition of high and unjustified fees for basic banking services. This created a trust gap between citizens and the banking system, and sometimes led to public dissatisfaction with the adoption of electronic mechanisms without a comprehensive infrastructure.
He added that electronic payment has actually contributed to reducing financial corruption in the payroll sector by eliminating the phenomenon of “ghost workers,” enhancing transparency in public spending and expense classification, and enabling regulatory authorities to track many financial transactions that were previously conducted outside the banking system. However, it has not been sufficiently successful in controlling speculation or narrowing the gap between the parallel market rate and the official exchange rate, which has persisted due to some parties exploiting payment cards to speculate on the dollar or smuggle currency.
Regarding digital transformation in other sectors, Dr. Hathal noted a relative improvement in e-commerce transactions and delivery services, along with the adoption of electronic payment mechanisms for fees and collection by some government agencies. However, weak coordination between institutions, the inefficiency of digital infrastructure, and the multiplicity of service providers without effective oversight remain obstacles that limit the acceleration of comprehensive digital transformation.
Dr. Hithal concluded that achieving true success in the electronic payment experience in Iraq requires a strategic shift in financial and banking policies, based on enhancing citizen confidence in the banking system, improving service quality, reducing bank fees, and linking electronic payment methods to providing real incentives, not just obligations. He also emphasized the importance of stimulating stagnant liquidity in society, noting that more than 90% of the currency remains outside the banking system, representing a missed opportunity for the national economy.
He said, “It can be said that the Iraqi experience in electronic payments has achieved significant strides in terms of infrastructure and quantitative expansion, but it still requires profound reforms in banking governance, service quality, and digital policy integration to establish a robust and inclusive digital economy.”
Anti-corruption activist Saeed Yassin explained that the governance of financial procedures and transactions is a fundamental preventative measure in accordance with international standards for combating corruption and transnational crimes. He pointed out that a significant part of this governance relates to simplifying government procedures for paying fees and collections electronically, ensuring that funds enter the public treasury and are not exposed to theft or assault, as was previously the case when cash was transferred or placed at the disposal of employees, a phenomenon witnessed by several institutions in Iraq.
Yassin added to Al Sabah that the other aspect of these measures lies in containing the crime of bribery by simplifying procedures for reviewing public institutions, adopting a system for booking appointments in advance for review, and paying fees via prepaid cards, which limits the collection of undue tax money or the illegal inflating of fees and levies.
He explained that the review process is subject to careful monitoring and statistics through the management of the “Aur” website and related sites, stressing that this experience has yielded tangible progress. He stated that he personally reviewed several government departments affiliated with the Ministry of Interior, such as the Passports Department, the National ID Card Department, the Traffic Department, and the Residence Card Department, all of which are processed through the pre-booking and electronic payment system, which represents a qualitative leap in combating bribery, transaction delays, and influence peddling that were prevalent in these departments.
Yassin pointed out that the new procedures also include a reporting and complaints system in other institutions, in addition to the establishment of the National Emergency Center, numbered 911, which represents a major achievement in improving communication and response mechanisms.
He emphasized that among the most important recommendations for developing this experience is reducing the commission collected by financial companies and banks on prepaid card transactions, and encouraging the public to purchase these cards and use them in daily financial transactions. He also emphasized the importance of continuous public awareness on how to use these cards, maintaining the speed of transactions, and ensuring that collection funds match official funds to protect funds from assault or theft.
Alsabaah.iq
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