Dear reader,
Today, we publish part II of our RO Long Read series on the Iraqi fintech sector.
Before diving in, we strongly recommend you read part I, which you can find here.
This series is written by RO Correspondent Rabel Kaka.
Based in Iraq, Rabel is a senior research associate at MAGNiTT and has become a fine connoisseur of the Iraqi fintech scene. He has spent the past few months interviewing Iraqi fintech startups, Iraqi VCs, and other relevant parties to paint a picture of where Iraqi fintech stands today.
Some of the topics Rabel uncovered include:
- The dichotomy between digital commerce and digital transactions (the former doesn't automatically lead to the latter).
- The benefits of digitizing and formalizing the Iraqi economy, and why it has become a governmental priority.
- The Iraqi government's efforts to push digital payments in the public sector.
- The hesitations Iraqi consumers and businesses have vis-a-vis digital payments, and how founders are building with those hesitations in mind.
- The current Iraqi "payment stack".
- Why fintech Iraq is bank-dependent, not bank-disruptive.
- The notable, encouraging evolutions in the Iraqi regulator's posture.
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The core friction: trust, not technology
The success of platforms such as Simma and Wayl shows that Iraqi consumers and merchants are willing to use digital payments when reliable rails exist. What we haven’t covered yet, however, is the long trust-building process needed for adoption to scale.
If you look at Iraq from the outside, it is easy to blame technology. People talk about low card usage, fragmented acquiring (ie: merchant card acceptance infrastructure), and weak settlement systems. Those issues exist, but they do not explain why cash remains dominant even when digital tools are available.
As we alluded to earlier, the deeper issue is trust, and trust in Iraq has a history. Decades of conflict, sanctions, and institutional disruption trained households and merchants to treat cash as tangible protection, not just convenience. When you hold cash, you do not depend on a system that can approve, clear, reverse, or freeze the money you own.