Electronic Payment Service Companies & the Fintech Legal Landscape in Iraq

We can name quite a few things that have changed in the world since 2014 particularly in the fintech and digital payment services sector of Iraq, and this is especially true when it comes to Iraq’s Electronic Payment Services Regulation No. (3) for 2014, which was recently replaced by the new Electronic Payment Services Regulation No. (2) for 2024, a critical update from CBI Iraq to support the fintech industry.

 

This comes amid rising investments from finance companies and reforms led by CBI bank Iraq with more than 10 million pre-paid cards in circulation inside the country and over 20 trillion IQD of electronic transactions in 2024 through a rapidly evolving online payment system in bank Iraq, reflecting the impressive progress being made in digitization. This resulted in the formulation of the 2024 regulation which goes hand in hand with the National Financial Inclusion Strategy issued by the Central Bank of Iraq in May 2025 in partnership with the World Bank Group, alongside the Arab Monetary Fund, AFI, and GIZ. 

 

As the fintech industry matures in Iraq, navigating regulatory compliance with CBI Iraq has become increasingly important. Therefore, by looking at the key takeaways of the regulations and strategies being developed by the Central Bank of Iraq, we can assist clients who are interested in starting or expanding their electronic payment services inside Iraq to better navigate the legal requirements of such activities and be able to take advantage of the expediential growth of the emerging Iraqi market. 

 

Types of Service Providers:

1. Operator: The natural or legal person responsible for providing and managing the infrastructure and technical and security aspects of the entire electronic payment system, including the systems and systems necessary to conduct financial transactions, including those that enable financial transfers between all financial institutions, in addition to the Central Bank. Operators are often at the heart of Iraq’s online payment system, interacting with both bank Iraq and financial institutions.
2. Participant: A legal entity licensed by the Central Bank to participate in the Iraqi payment systems and permitted, directly or indirectly, to send and receive transfer orders through the system. Participants may include local and international finance companies working under CBI Iraq mandates.
3. Electronic Payment Service Provider: A legal entity licensed by the Central Bank to provide electronic payment services. This role is central to the operation of epay platforms and other fintech applications in Iraq.
4. Electronic Payment Service Provider Agent: An agent authorized by an electronic payment service provider to act on its behalf, according to the nature of the activity specified in the contract concluded between them.
5. Provider of Electronic Payment Service: Includes the provider, operator, and participant.
6. Foreign Transfers Service Provider: A legal entity engaged in the activity of sending and receiving international remittances.
7. Foreign Transfers Service Provider Agent: An agent authorized by a foreign remittance service provider to carry out its business by sending and receiving remittances within and outside Iraq, operating in accordance with the regulations issued by the Central Bank of Iraq and the foreign remittance service provider.

 

Authorized Activities:

1. Issuing and managing electronic credit, debit, and prepaid payment instruments under the scope of the electronic payment service provider license.
2. Managing deposits and withdrawals of electronic funds through electronic channels, technologies, and systems authorized by the Central Bank.
3. Managing and executing electronic credit and debit payment transactions secured by a credit ceiling or balance.
4. Collecting funds electronically through available electronic and digital payment channels. 
5. Executing and settling electronic payments through financial and banking systems, including the Real-Time Gross Settlement System, the Central Securities Depository System, the Electronic Clearing System, the National Switchboard, instant electronic payment, national electronic payment gateways, and others.
6. Emerging services such as digital wallets, mobile payments, and any modern financial technologies permitted by the Central Bank’s regulations and standards.
7. Aggregating and facilitating electronic payments and integrating financial services and platforms for various electronic payment transactions, in accordance with the standards, regulations, and rules established by the Central Bank.
8. Any other activities related to the provision of electronic payment services approved by the Central Bank in accordance with the specific regulations it issues for this purpose.

 

General Licensing Requirements:

1. A copy of the company’s certificate of incorporation, its articles of association, and the minutes of appointment of its authorized manager, certified by the Companies Registration Department.
2. The company’s name and address, the name of the company’s authorized manager, the names, nationalities, permanent addresses, and CVs of the founders and shareholders.
3. The building’s title deed or a certified lease contract for the company.
4. The company’s capital, as determined by the Central Bank, (minimum of 10 billion IQD).
5. The company’s financial solvency to provide services on an ongoing and effective basis.
6. Experience in the field of electronic payment and related services.
7. the company’s objectives.
8. A comprehensive feasibility study for at least three years, consistent with approved frameworks, standards, and best practices, including, at a minimum, the following:
   1. Economic feasibility and capital and operating costs.
   2. Opportunities, challenges, strengths, and weaknesses.
   3. Type of activities and services provided.
   4. Strategic plan and anticipated work plan.
   5. Technical solutions for systems and applications.
   6. Technical and information infrastructure.
   7. Information security.
   8. Anti-money laundering and anti-fraud management systems.
   9. Procedures to be followed to protect the funds of electronic payment service users, including the creation of separate accounts for these funds.
   10. Dispute resolution mechanisms for customers.
   11. Business continuity, continuity, and a disaster recovery plan for any unforeseen circumstances.
   12. Procedures to be taken to manage and monitor risks that the service provider may be exposed to.
9. Licensing fees are non-refundable pursuant to a record executed through the gross settlement system, as determined by the Central Bank.
10. Approval from the competent security authorities that there are no security obstacles preventing the issuance of the license.

 

Take into consideration: 

• Further requirements are established by the Central Bank on each mentioned point, such as the requirements for appointing an authorized manager for the company, the technical requirements for the security systems and data management system that will be used, etc.
• Once an application is approved by the Central Bank, a preliminary license is issued to give the provider time to be able to complete the remaining requirements to obtain the final license.
• Applications are reviewed and decided by the Central Bank within 90 business days.

 

To summarize, in a country with a population of more than 45 million and the highest expected GDP growth for 2026 (4.4%) in the Middle East and North Africa, as forecasted by the World Bank. The emerging Iraqi financial sector is only getting started, and ALSAIF Law Firm is here with more than 46 years of experience to guide you through its opportunities, risks, incentives, and obstacles. Don’t hastate to contact us.