ZainCash CEO: Iraq is 5 years behind in digital payments

• Adoption rises but bottlenecks remain
• 95% of payments use ZainCash
• Fees in Iraq lower than elsewhere

A burgeoning youth market is driving adoption of digital payments in Iraq, but deep-rooted reliance on cash, talent bottlenecks and rock-bottom fees constrain growth, according to Yazen Altimimi, chief executive of local fintech ZainCash.

“We are moving in the right direction,” Altimimi told AGBI from Baghdad. “To be realistic, I see five years before Iraq comes to the regional level in terms of digitising payments.”

Altimimi has led ZainCash since its launch a decade ago, when the Iraqi central bank began efforts to bolster financial inclusion by licensing multiple mobile wallets. ZainCash is an independent company majority-owned by Kuwaiti telecom Zain Group.

It offers peer-to-peer transactions, cash deposits and withdrawals from 10,000 agents across Iraq, overseas transfers through Western Union, online merchant payments and a prepaid Mastercard for use locally or internationally.

The app is responsible for about 95 percent of all mobile payments in the country, according to central bank data.

ZainCash is part of a growing digital environment in Iraq, Altimimi said.

Ecommerce, ride-hailing and food delivery apps, including Careem, Talabat, Toters and Baly, have established themselves from elsewhere in the region or are sprouting up domestically. “And we’re seeing a lot of small startups coming,” he said.

Historically, Iraq’s finance sector has been dominated by two state-owned banks – Rafidain and Rasheed – both of which are being considered for restructuring or merger under the advice of overseas consultancies.

A host of startups have also launched. However, in 2023, the US – which controls Iraq’s oil revenues through an escrow account in New York – banned 14 Iraqi financial institutions from accessing the US dollar payments system, alleging that they acted as conduits for Iran.

Iraq’s population jumped from less than 28 million in 2004 to around 45 million in 2024, the latest census found. About 60 percent of Iraqis are under 25 years old and 40 percent are below 15.

The value of digital payments in Iraq was forecast to surpass $26 billion last year and grow at a 24 percent annual rate from 2025 to 2029, according to Germany’s international development agency GIZ.

“Obviously, the country is still cash-based,” Altimimi said. “People still trust the cash in their hands and in their homes, and it takes time for the customer to get convinced by making one payment and seeing how easy it is.”

Mobile settlements for electricity bills across Iraq and the autonomous Kurdistan region launched in recent months and have received a positive response, he said, expressing hope they will lead to wider adoption of digital payments.

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However, fintechs in Iraq contend with scarce and expensive talent, and burdensome regulations around data security and privacy.

Paired with still-low overall utilisation and fees, these make it hard for new companies to succeed, according to Altimimi.

“This industry is still very new in Iraq and there are many banks that came here in recent years – and they are all going after the same talent. And the cost of labour locally is higher than regional levels.”

Fees, on the other hand, are lower than for comparable services in GCC states or the West.

Altimimi said that in the UAE payment companies can take 4 or 5 percent on transactions while in the US fees of 2 to 5 percent are typical.

“These fees you will never see in Iraq,” he said. “Here, 1 percent is on the high end.”

On the plus side, digital payments continued growing through disruptions from the US-Israeli war with Iran.

“We saw travel decrease, so cross-border point-of-sale payments definitely went down,” he said. “But local and cross-border ecommerce stayed strong.”

ZainCash is preparing to provide customers with “nano” instant loans from September and is working with banks to develop a payment plan service similar to buy-now-pay-later.

It is also in the last stages of becoming a fully licensed digital bank under a two-year-old programme that has received more than 70 applications.

This will enable ZainCash to lend larger sums, offer savings accounts and access the Swift international payment messaging system.

“Once you become a bank, everything changes,” Altimimi said.