Financial Innovation In Iraq: Shifting To A Cashless Payments Landscape
Mario Macari Economy News – Baghdad The business sector around the world is witnessing a real revolution as a result of the adoption of digital payment systems. This heralds many transformations in many countries such as Iraq, where monetary solutions have always dominated the financial system. Although Iraq has one of the lowest rates of access to financial services in the world, with only 19% of its adult population having bank accounts, the country has taken important steps to achieve financial inclusion[1].
The Central Bank of Iraq launched several initiatives in its second strategic plan for the years 2021-2023 in order to confront this challenge. We have witnessed the implementation of many important reforms, such as supporting digital financial services, mandating the use of direct points of sale in financial transactions, reducing commercial fees, imposing linking bank accounts, and providing incentives to encourage the use of direct points of sale.
These initiatives, as a whole, aim to accelerate the pace of transition to non-cash payments so that companies and individuals can achieve optimal benefits from them.
Given their ability to influence consumer purchasing habits, merchants are critical players in this trend. By shifting their payment models to digital platforms, merchants can transform their business as well as contribute to a significant change in the overall economy. Thanks to the availability of safety and transparency, merchants can encourage the adoption of financial reforms among the population, by adopting direct point of sale systems and adopting digital culture.
Unfortunately, many merchants face many challenges in terms of lack of awareness and financial education when creating and using digital payment systems. The lack of proper training in accepting these systems and financial education hinders merchants and consumers alike, often confining them to the traditional realm of cash transactions.
Perhaps the prosperity of the digital payment system will greatly help increase financial inclusion and enhance economic growth in emerging markets such as Iraq. Digital transactions are fast and easy to track, while giving merchants relevant insights into their future sales and budgets. These payments involve less risk compared to cash transactions. With the right infrastructure and local payment service providers, digital payments can provide merchants with an optimal platform to gradually grow their business.
The Iraqi government is fully aware of the importance of digital transformation to enhance viable and prosperous economies. Recently issued policies by the Central Bank of Iraq and the government to support digital payments are scheduled to be implemented this year.
Moreover, according to Statista, a company specialized in market studies and statistics, the total value of transactions in the digital payments market is expected to reach $10 billion in 2023[2].
There are many digital payment platforms operating in the country, as the Central Bank of Iraq has issued 17 licenses of this type so far[3]. FinTech companies are collaborating with telecommunications service providers in Iraq to provide consumers with a seamless and secure digital experience to facilitate digital payments.
Visa collaborated with its partners last year to launch a variety of payment products to serve Iraq’s underbanked population.
The future seems to be increasingly moving towards cashless solutions, as technology continues to penetrate every aspect of our lives. As the world continues to evolve to keep pace with the digital age, financial education and the implementation of the strictest digital security measures will play a critical role in facilitating the transition to a cashless economy more smoothly.
This transformation promises to increase the efficiency of the financial system and provide comprehensive access to financial services, especially for residents who do not have bank accounts or have accounts but do not use them.
There is no doubt that enhancing financial culture plays an essential role in completing this transformation and ensuring that individuals fully benefit from the benefits of digital financial solutions. To support financial education efforts in the market, we have selected two of our partners to collaborate with in order to provide content that can help build knowledge and help individuals improve their understanding of financial concepts and services.
These partnerships will play a pivotal role in developing a comprehensive digital payments system that enables the Iraqi economy to flourish and develop in the digital age. Written by Mario Macari, Visa’s Levant General Manager Added 09/17/2023 – https://economy-news.net/content.php?id=36388
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