The Central Bank of Iraq (CBI) has set July 2026 as the deadline for eliminating cash transactions across all government institutions, part of the most ambitious payment infrastructure modernisation programme in the country's history. The initiative, operating under the direct supervision of Prime Minister Mohammed Shia' al-Sudani, aims to transform Iraq from one of the most cash-dependent economies in the Middle East into a digitally connected financial system.

The Scale of the Challenge

Iraq's payment landscape is an outlier in the MENA region. While neighbours like the UAE, Saudi Arabia, and Bahrain have built sophisticated real-time payment systems over the past decade, Iraq's financial infrastructure remains heavily cash-based. Citizens have historically preferred to store wealth outside the banking system, driven by decades of conflict, sanctions, and institutional distrust.

The CBI has licensed 16 electronic payment companies and is preparing to launch a national payments company to consolidate electronic transaction infrastructure. Digital banking is also being introduced, with Iraq's first fully digital bank licences currently in the approval process.

Four Infrastructure Pillars

CBI Governor Ali Mohsen Al-Alaq has outlined four core infrastructure components under development:

  1. Instant Payment System. A 24/7 real-time payment platform enabling instant money transfers between accounts. This would make Iraq one of the last major MENA economies to deploy instant payments, following the UAE (Aani, 2023), Saudi Arabia (sarie, 2021), Egypt (InstaPay, 2022), Bahrain (Fawri+, 2020), and Kuwait (WAMD, 2024).

  2. Unified Government Payment Gateway. A centralised platform for all government-to-person and person-to-government payments, designed to reduce manipulation and increase transparency in public transactions. The Interior Ministry has already eliminated cash payments entirely.

  3. National Card Scheme. A domestically operated card scheme to reduce dependence on international networks (primarily Visa and Mastercard) and create locally adapted financial products. This follows a pattern seen across the Gulf, where the UAE launched Jaywan, Saudi Arabia operates mada, and Oman introduced Maal.

  4. National Switch. Core switching infrastructure to support higher transaction volumes with the speed, stability, and security required for a national payment system. Without a reliable switch, none of the other three components can operate at scale.

Current Progress

Despite the ambitious timeline, several milestones have been reached. All government institutions now use electronic systems for payments and revenue collection, a milestone announced in July 2025. The Interior Ministry - historically one of the most cash-intensive government departments - has fully transitioned to electronic payments. Officials describe the overall progress as "excellent," though independent verification of readiness levels is limited.

Digital payment volumes are projected to grow from approximately billion annually to over billion by 2026, a 300% increase that would represent a step change in financial digitalisation.

Why This Matters

Iraq's population of 44 million makes it the fourth-largest economy in the Arab world by population. A successful payment digitalisation would bring millions of previously unbanked or underbanked citizens into the formal financial system, with significant implications for financial inclusion, tax collection, and anti-money laundering compliance.

The July 2026 deadline for government cashless operations is ambitious by any standard. For context, Saudi Arabia's Vision 2030 target of 70% electronic retail payments took nearly a decade of sustained investment in infrastructure, and the Kingdom had the advantage of starting with an already-functioning RTGS and card switching system.

Iraq is attempting to build all four foundational payment infrastructure components simultaneously while mandating adoption - a compression of what typically takes 10-15 years into approximately two. Whether the July 2026 deadline is achievable will depend on the pace of national switch deployment and the ability to onboard commercial banks and merchants at scale.

Regulatory Developments

The CBI is also conducting studies on crypto-asset regulation, balancing potential opportunities against risks related to financial stability, fraud prevention, and anti-money laundering. Governor Al-Alaq has described digital transformation as "a strategic choice for building a modern state, diversifying the economy, and delivering transparent public services."

Sources: Iraq Business News - Iraq's Central Bank Advances Digital Payment Transformation; The New Region - Iraqi state institutions to go cashless by July 2026; The National - Iraq's cashless push gaining pace but much more needs to be done.