The Central Bank of Iraq has been working since 2004 to develop Iraq's payments infrastructure through initiatives like payment systems, legal frameworks, and telecommunications networks. It is now encouraging government ministries and state-owned institutions to migrate from cash payments to electronic payments through banks and payment service providers. This will improve efficiency and reduce costs, corruption, and theft. The Retail Payments System Infrastructure being developed will link all payment systems to provide improved services and access for individuals and businesses to make electronic payments to and from the government.

1. Enabling e-Payments for government
Phil Corper
Executive Payments Advisor, CBI
January 2016

2. Central Bank of Iraq
Vision for payments in Iraq
The Central Bank of Iraq has been working
since 2004 to develop and integrate the Iraqi
payments infrastructure through:
• Payments systems
• Legal and regulatory frameworks
• Telecommunications network
• Global standards
• Capacity building

3. CBI is encouraging migration to electronic
payments with several initiatives:
• Encouraging ministries and state owned
institutions to use private sector banks and
Payment Services Providers (PSPs) for
payments, e-payments and m-payments
• Supporting the e-Dinar scheme to facilitate
card based payments to and from ministries
and state owned institutions
• Developing an automated clearing system to
facilitate processing transactions between
ministries and state owned institutions
• Developing a securities trading system for
secondary markets
• Participating in the Arab Regional Payment
System
Central Bank of Iraq
Initiatives to engage with and support the state sector

4. Central Bank of Iraq
Retail payments objectives
The Retail Payments System Infrastructure (RPSI) will:
• Reduce the use of cash and cheques
• Ensure that every Iraqi individual has at least one
account and can use it to make card or mobile
payments
• Enable e-payments or m-payments at all merchants
• Enable government and businesses to make and
receive all payments electronically, however large or
small
• Link all payment systems to improve services and
remove barriers to take up and growth
• Establish an open and competitive marketplace
which provides customers with fair value and choice
• Prevent money-laundering and financing terrorism
and crime
• Increase deposits and make finance available for
investment
• Develop and strengthen the private financial
services sector
Many-to-many model

5. Retail payments opportunities for government
Banks and Payment Services Providers offer
government entities major opportunities to migrate
from distribution and collection of physical cash to
end-to-end electronic payments
• Improve distribution and collection of payments
geographically
• Improve financial inclusion
• Speed up payments and increase efficiency
• Enable cash management
• Reduce effort, costs and errors
• Reduce theft and corruption
• Improve verification, record keeping, monitoring
and audit
• Provide opportunities for value added services

6. Retail payment services for government
Banks and PSPs support payments to and from
ministries and state institutions:
• Funds are always deposited and safeguarded
in a bank licenced by the CBI
• The bank or PSP provides a payment service
which
• moves money electronically between the
ministry account and the account chosen
by the other party
• Provides reporting and value added
services to the ministry
• The RPSI enables any bank or PSP to
send and receive the payments to all
other banks and PSPs so that customers
can choose their bank or PSP and are not
obliged to have accounts with all banks
and PSPs
Bank Bank
Customer Customer
Iraqi
Payment
Systems
Individuals
Businesses
Ministries
State institutions
Card PSPs
Mobile PSPs
Card PSPs
Mobile PSPs
PSP PSP

7. Retail payments from government
Each bank and PSP offers different services so
ministries (and state institutions) can choose
those that best meet each of its needs
• Salary, pension and social security
payment (direct credit) – Ministry provides
electronic details of payments to be made
to its bank or PSP, bank or PSP sends 1
electronic debit to ministry account,
distributes individual electronic payments
into accounts of the employees,
pensioners and social security
beneficiaries, and provides a report
• Payments to suppliers (direct credit) –
Ministry provides electronic details of
payments to be made to its bank or PSP,
bank or PSP sends 1 electronic debit to
ministry account, distributes individual
electronic payments into accounts of the
suppliers, and provides a report
Bank Banks
Customer Customers
Iraqi
Payment
Systems
Individuals
Businesses
Ministry or
state institution
PSP PSPs
Instructions
Payments
AdvicesReport

8. Retail payments to government
Each bank and PSP offers different services so
ministries (and state institutions) can choose
those that best meet each of its needs
• Bill payment – Ministry provides electronic
details of bills to be collected, Ministry’s
bank or PSP provides a bill to each payer
and a report of the bills paid to the Ministry
–Direct debit – Ministry’s bank or PSP
takes the money from payers’
accounts, sends 1 electronic credit to
the Ministry account
–Direct credit – Each payer sends
money from his/her account, Ministry’s
bank or PSP sends 1 electronic credit
to the Ministry account
–POS – Payer visits Ministry or its
agent and pays with a card at a POS,
Ministry’s bank or PSP sends 1
electronic credit to the Ministry
account
Bank Banks
Customer Customers
Iraqi
Payment
Systems
Individuals
Businesses
Ministry or
state institution
PSP PSPs
Instructions
Payments
AdvicesReportBills
BillsBills

9. The way forward
The Council of Ministers has instructed all
ministries and state organisations to migrate
from using cash to using electronic payments
to:
• Distribute cash to individuals and
businesses including paying employees
and suppliers
• Collect cash from individuals and
businesses including taxes, fees and utility
bills
Ministries and state organisations should now:
• Review their payment needs
• Seek competitive offers from banks and
PSPs
• Stop using cash and start using electronic
payments including card and mobile
payments for all payments to and from
businesses and individuals