Over a year ago, we talked about how shaky trust in tech-based services in Iraq was one of the reasons that some startups in Iraq fail to make it. Without trust in technology to ease delivery, payment, and access, most businesses are limited to non-scalable solutions. This isn’t to say that there is no struggle with introducing digital currencies in Iraq today. However, the fact that a mobile wallet payment company based in Iraq, such as ZainCash, has made it to one of Forbes’ top 30 fintech companies in SWANA means that there is definitely positive change. Mobile payment platforms and wallet payments in Iraq are gradually becoming household names for an increasing number of customers in Iraq.
What is Fintech?
For many people around the world, it is difficult to imagine not being able to order and pay for a delivery at the click of a button, or to order a taxi ride and pay for it through an application without having to haggle the price with the driver. All these developments have been possible because of fintech. Fintech combines the words “financial” and “technology” and refers to the making of financial services and transactions more accessible using software.
Fintech businesses are those companies that use technology to develop, improve and automate financial services and transactions. This involves the mobile technologies that allow your phone to also be your payment method or applications that allow you to make financial transactions without having to visit a physical building.
On the other hand, fintech-integrated businesses are businesses that integrate fintech (created by fintech businesses) into their offerings to improve their use and delivery to customers. This means that if you’re paying online on an e-commerce website or ride hailing application, this service would have integrated a fintech platform to help you easily pay for your order.
|Fintech Businesses in Iraq
|Blue Pay: Blue Pay is an innovative startup for e-payment services and systems
– Blue Pay develops payment solutions in cooperations with VISA to deliver on e-payment systems that match international standardsIt issues and manages cards and bill payments to accelerate financial inclusion in the Central Bank of Iraq
– Fintech products focused on streamlining payment transactions with a few clicks so merchants can focus on business development instead of payment struggles
|FastPay (Product of Fastlink): FastPay is a digital wallet and payment service in KRI.
– FastPay enables users to make fast, secure, and convenient online payments using mobile phones.
– It will also aim to include paying utilities
|ZainCash (Product of Zain): ZainCash is a mobile wallet and payment service in Iraq.
– Users can pay for various services, transfer money to other ZainCash users or bank accounts, and fund their wallets.
– Includes worldwide money transfer services.
|First Iraqi Bank: The first Iraqi Bank is a pioneer in digital banking in Iraq, providing innovative solutions to empower its customers.
– The bank offers traditional banking services such as loans, deposits, and foreign exchange, along with modern digital banking solutions.
|Nasswallet/Nasspay: Nasswallet is a mobile wallet and payment service in Iraq.
– NassPay is a digital finance getaway linked to Nasswallet accounts with a debit card for ATMs.
– NassPay enables businesses to accept online payments from their customers.
|Zood (ZoodPay/ZoodMall): Zood is a digital lending platform that embeds FinTech (ZoodPay) and E-commerce (ZoodMall) services in Iraq for a smooth and easy process for merchants and clients.
– ZoodPay provides digital money transaction and money transfer services.
– ZoodMall integrated with ZoodPay account offers to pay in installments for clients.
|Edicoo Group (PeleMall/PelePare/Boombeene): PelePare is the first established digital payment service in KRI.
– Boombeene, an online delivery and cargo service, and PeleMall, an online e-commerce and retailer platform, have PelePare integrated into them for customers and merchants to pay for their fees.
|Asiahawala (Product of Asiacell): An electronic wallet provides money transfers and other transaction services (such as salary distribution, booking tickets, and bill payment)
|QiCard: Smart card solution provided by ISC, a leading electronic payment services company in Iraq.
– Used for the distribution of pensions, salaries and social welfare aid in Iraq
– Issues and acquires payment cards on behalf of affiliated banks in Iraq such as Rafidain and Raheed bank.
|Wayl: Payment facilitator that enables smooth and democratised access to acquiring services for small merchants and individuals.
– Provides payment links besides an integration SDK for websites and applications
– Involves a single contract that allows daily transactions to be used for merchants to sell to their customers
Startups that integrate fintech in their platforms are on the rise
From Orderii to Miswag, some of the most popular and fast-growing startups in Iraq have integrated fintech in their platforms. More exposure to fintech-integrated platforms means more familiarity with its concept and more trust in technology as a means rather than an end. This doesn’t necessarily mean that online payments are becoming mainstream. At Miswag, an Iraqi e-commerce platform, a mere 2% of transactions are quoted to be online payments with most customers still preferring cash-on-delivery transactions when using the e-commerce platform. Yet an increasing number of new startups and businesses that build fintech-integrated platforms means that there is more hope that digital transactions have the potential to become mainstream.
|Cross-regional e-commerce platform
|Cross-regional e-commerce platform
|Lending and reselling e-commerce platform
|Lending and gaming app
However, growing fintech businesses in Iraq still face challenges
Yes, customers in Iraq are getting comfortable with tech in payments and transactions. However, fintech businesses and fintech-integrated platforms still struggle with the limitations posed by outdated or broken infrastructures and increasing bureaucracy in regulatory systems. Fintech companies and businesses tend to evolve rapidly, making it even more crucial to build foundations and systems that stay in touch with unexpected changes and ambiguity in Iraq’s regulations. With the potential that fintech has, its approach to managing regulatory changes can also make contributions to more robust corporate governance in Iraq in the process too.
On the other hand, the scalability of fintech businesses and fintech-integrated platforms can be limited by infrastructure, too. Weak mobile and internet penetration in rural and remote areas in Iraq also means lack of identification coverage and limited payment rails. Accounting for geographic variability across Iraq and customising strategies according to provinces is key to ensuring that the potential of fintech is tapped efficiently.
At the same time, funding for fintech in Iraq is making headlines
A track record of startups that have raised funding in and for Iraq has attracted more funding sources. ZoodPay, the “Buy Now Pay Later” (BNPL) super-app closed a $38 million Series B round in 2021 to facilitate their expansion in Iraq. In the same year, Miswag closed a pre Series A round of $1.6 million whilst Baly, Iraq’s first superapp, raised $10.5 million in 2022. Earlier this year Iraqi e-commerce platform Orisdi, raised $220,000 and loyalty platform Kurdivia, raised its first $125,000, not to mention other startups such as Pure Platform that have raised angel investment funding.
Such fundraises have not only showcased the potential of fintech-integrated startups in Iraq, but has also meant that the tech scene in Iraq is finally making headlines in mainstream tech and startup news outlets. In March this year, Iraqi Islamic Bank for Investment and Development (IIB) and MSA Novo (MSA), a Singapore-headquartered global venture capital fund made headlines when they came together to launch a new fund aimed at investing in Iraq’s overall technology ecosystem, focusing specifically on fintech areas such as payments infrastructure, consumer tech platforms and enterprise enablers.
Fintech could finally solve all your “dollar or dinar cash” dilemmas
The potential of fintech products in Iraq are not limited to paying online for your next Miswag order. How many times have you been carrying either dinars or dollars to only find out the merchant only accepts the currency you’re not carrying? You probably recall an awkward time counting the liras you have left in a shop in Istanbul only to find you need to walk back and look again for a currency exchange shop. Fintech businesses in Iraq such as BluePay have identified just those problems that you face on a day to day basis. The real problems people in Iraq face when dealing with payments that can be solved with solid digital payment systems that allow cash frustrations to be replaced by a few clicks on a phone. Recently approved by the Central Bank of Iraq to offer international money transfer services, BluePay provides multi-currency solutions where an Iraqi on holiday in Turkey can use a digital payment service to pay for products from merchants that only deal with Turkish currency.
Mainstream news and media has overwhelmingly shed light on political unrest, wars and sanctions that Iraq has faced. We know those are problems that have influenced much of today’s financial ecosystem and infrastructure. However, fintech in Iraq has the potential to come to the forefront – to solve the problem of ill-shaped supply chains that continuously cause frustration and pose obstacles for business in Iraq.
As the number of fintech startups founded by Iraqis continues to rise, the people of Iraq are poised to experience not only streamlined and expedited transactions that fuel business growth, but also a transition from being mere consumers of fintech products to cultivating an innovative ecosystem that nurtures fintech founders and pioneers.