Smart banking: how mobile technology is revitalizing payments in Iraq.

As mobile broadband connectivity continues to bring benefits to remote locations and emerging markets, mobile payments have fast become a crucial application for end-users. In war-torn Iraq, provider International Smart Card (ISC) is helping citizens gain access to their salaries and pensions via an innovative, secure e-payments and smart card system.

Iraq has faced massive upheaval over the past couple of decades and the impact of multiple conflicts on domestic services has been huge. The country’s financial infrastructure never had a chance to develop at the same speed as other countries in the region. And Iraqi citizens don’t have access to many of the modern technology-powered financial services that many people take for granted, such as internet banking, ATMs and call centers.

That is changing, thanks to ISC and its development arm, Canny Quest International (CQI). As Dr. Hasan Alkhatib, Managing Director of Canny Quest International, explains, “Iraq’s banking sector is underdeveloped, creating an opportunity for the deployment of new technology.”

Take the challenge that 2 million pensioners used to face when collecting their pension in Iraq. They used to have to line up at the beginning of the month at one of the few branches of the state-owned bank to receive their pay by standing in line for two or three days. Not only did this take a long-time, the paper-based manual processes were open to serious abuse and fraud occurred on a wide scale. Many people were simply unable to get their hands on money owed to them.

Mobile payments – growing now, essential in future

To address problems like these, ISC looked to develop mobile payment technology that would empower Iraqi citizens and give them access to life-enhancing financial services.

Mobile payments are a technology on the rise worldwide. In the US for example, research house Forrester has forecast that the adoption will continue and mobile-based payments will reach $142 billion in volume by 2019, while Accenture’s ‘2015 North America Consumer Digital Payments Survey’ revealed North American consumers are using their smartphones for payment transactions in increasing numbers.

The report also showed that today’s consumers want mobile banking focused around simplicity, personalisation and seamless, everyday solutions. In short, exactly what ICS and Canny Quest are helping deliver to Iraqi citizens.

Helping transform lives in Iraq

The solution to the challenge of limited physical bank branches throughout Iraq began with the ISC smart card technology. The project began back in 2008, utilizing smart cards, customer biometric data and independent merchants who were used to ‘cash out’ to the cardholder. Identification was carried out using government-issued IDs, customers were fingerprinted and could then head to a ‘cash out’ merchant to claim their cash – the ‘cash out’ merchants effectively operating as point-of-sale (POS) outlets.

The merchants are each equipped with a biometric reader to confirm the veracity of the customer and they take a commission on each transaction, ensuring the business opportunity for the merchants themselves too.

Since 2008 and the initial pilot project, ISC’s network of POS clients has expanded to around 6,300 throughout Iraq, and the services offered to citizens have grown far beyond just pensions – the outlets delivering the salaries of 350 mostly government institutions, with data centers processing the transactions based outside the country.

Bringing benefits to all

In addition to the much greater levels of convenience enjoyed by Iraqi citizens, the ISC approach has brought further benefits to the government too. Previously high levels of fraud under the paper-based manual system have been greatly reduced, and ISC has spoken of plans to continue expanding the network throughout the country.

ISC has already equipped 4.5 million Iraqi citizens with smart cards, named ‘Qi’ cards, and intends to roll out more cards and more POS outlets – potentially as many as 500,000 all over Iraq. To assist with this ambitious expansion, ISC is working with Orange to improve network connectivity in the country and ensure high levels of security. Following a six month testing period, ISC is also switching over to a machine to machine (M2M) network built on Orange’s Business VPN (virtual private network) and is preparing to shift the network over to 3G.

As Dr. Hasan Alkhatib concluded, “We’re going to need significantly more terminal points. We’re the leading financial institution providing modern retail banking services in Iraq and we see ourselves operating to a great extent, as a virtual bank. We expect to grow rapidly and dominate the market.”

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