Experts in the field of economics are increasingly agreeing that embracing modern banking technologies, particularly electronic payment systems, is vital for enhancing the banking sector’s efficiency. By adopting electronic payment methods, banks can improve their profitability and reduce costs. Conversely, sticking to traditional methods hampers internal banking operations, making them slower and less responsive to customer needs.
The Iraqi government has clearly recognized the importance of digital transformation, especially within the financial sector. This transformation aims to improve daily financial transactions for citizens. A notable example is the Ministry of Trade, which has reported a significant rise in electronic payments at hypermarkets it operates. The adoption of electronic payment methods now accounts for 15% of total transactions daily, a marked increase from previous figures of 2 to 4%.
The Ministry’s spokesperson, Mohammad Hannon, explained that all cashiers in these hypermarkets are equipped with POS (Point of Sale) machines, enabling citizens to pay electronically instead of using cash. This shift towards digital payments aligns with the government’s broader goal of enhancing financial inclusion and modernizing the banking infrastructure.
However, while the adoption of electronic payments has been promising, there is still a need for further incentives to encourage citizens to make the switch from cash to electronic payments. Financial expert Muthar Mohammed Saleh highlighted that the country needs to present clear financial benefits for using electronic cards over traditional cash payments. For instance, offering discounts or incentives to card users could be a useful strategy to promote digital transactions.
Saleh also stressed that managing payments electronically, rather than with cash, can significantly reduce national costs. Globally, the cost of handling cash in an economy can reach up to 5% of the GDP. By reducing these costs, the government can reallocate funds to other important areas such as healthcare and education.
Furthermore, the Central Bank of Iraq has reported an increase in total deposits in banks, which grew by 4.2% in the third quarter of 2024, reaching 127.6 trillion dinars. This rise in deposits signals a positive trend toward financial inclusion. Financial expert Qusay Safwan explained that encouraging citizens to use banks rather than storing cash at home could further increase electronic payment adoption.
Additionally, improving the country’s banking services and restoring trust in financial institutions is key to driving the adoption of electronic payments. Financial expert Mustafa al-Karawi noted that building confidence between citizens and banks is essential for the success of the digital transition.
In conclusion, Iraq is making significant strides toward modernizing its financial and banking systems. With the continued growth of electronic payments, the country is enhancing its financial governance and aligning with global standards. The rise of electronic payments in Iraq promises to be a crucial element in improving the country’s economic efficiency and financial inclusion.
