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Shafaq News-
Baghdad

Cash transactions
remain the preferred method of payment for many Iraqis despite the expansion of
banking cards and digital applications, as concerns over trust and system
stability continue to limit broader adoption.

Economic expert
Mohammed Al-Hassani told Shafaq News on Monday that Iraq’s liquidity structure
continues to reflect a heavy reliance on cash, noting that around 40% to 45% of
the money supply remains outside the banking system, while only 55% to 60% is
held within banks.

The Central Bank of Iraq (CBI) also indicated that total
cash in circulation stands at 93.789
trillion dinars, while 115.535
trillion dinars ($79.7 billion) are held within banks. Recent economic reports estimate that 90% to
95% of transactions in Iraq are still conducted in cash.

Read more: Cash culture dominates Iraq, reform efforts stall

Financial adviser
to the Prime Minister, Mazhar Mohammed Salih, told our agency that the informal
economy still accounts for a significant share of activity in Iraq, reinforcing
reliance on cash, particularly in markets and small businesses. He added that
cultural factors and limited digital financial awareness contribute to this preference,
alongside concerns over fees and technical errors, noting that many cardholders
use their cards primarily to withdraw salaries rather than as a payment tool.

However, Salih
pointed to emerging positive indicators, with gradual growth in the use of
electronic payment cards, particularly at fuel stations and in some services,
supported by the government’s economic and banking reform program.

Speaking to Shafaq News,
financial expert Mahmoud Dagher said the shift from cash to electronic payments
faces several challenges, including the lack of a fully organized economic
cycle, such as business registration, property documentation, and access to
bank accounts. Additionally, the absence of large segments of consumers and
merchants from the banking system limits the expansion of electronic payment
tools, while increasing trust in the banking sector and offering incentives, such
as discounts or additional benefits, is essential to encourage adoption.

“Imposing
electronic payments by force may not yield positive results,” he stated, noting
that Iraq’s electronic payment system is still relatively new, having emerged
only around two years ago.

Read more: From Cash to Cards: Iraq’s shift to a cashless future