Enabling e-Payments for government

Phil CorperExecutive Payments Advisor, CBI

January 2016

Central Bank of Iraq

Vision for payments in Iraq

The Central Bank of Iraq has been working

since 2004 to develop and integrate the Iraqi

payments infrastructure through:

• Payments systems

• Legal and regulatory frameworks

• Telecommunications network

• Global standards

• Capacity building

CBI is encouraging migration to electronic

payments with several initiatives:

• Encouraging ministries and state owned

institutions to use private sector banks and

Payment Services Providers (PSPs) for

payments, e-payments and m-payments

• Supporting the e-Dinar scheme to facilitate

card based payments to and from ministries

and state owned institutions

• Developing an automated clearing system to

facilitate processing transactions between

ministries and state owned institutions

• Developing a securities trading system for

secondary markets

• Participating in the Arab Regional Payment

System

Central Bank of Iraq

Initiatives to engage with and support the state sector

Central Bank of Iraq

Retail payments objectives

The Retail Payments System Infrastructure (RPSI) will:

• Reduce the use of cash and cheques

• Ensure that every Iraqi individual has at least one

account and can use it to make card or mobile

payments

• Enable e-payments or m-payments at all merchants

• Enable government and businesses to make and

receive all payments electronically, however large or

small

• Link all payment systems to improve services and

remove barriers to take up and growth

• Establish an open and competitive marketplace

which provides customers with fair value and choice

• Prevent money-laundering and financing terrorism

and crime

• Increase deposits and make finance available for

investment

• Develop and strengthen the private financial

services sector

Many-to-many model

Retail payments opportunities for government

Banks and Payment Services Providers offer

government entities major opportunities to migrate

from distribution and collection of physical cash to

end-to-end electronic payments

• Improve distribution and collection of payments

geographically

• Improve financial inclusion

• Speed up payments and increase efficiency

• Enable cash management

• Reduce effort, costs and errors

• Reduce theft and corruption

• Improve verification, record keeping, monitoring

and audit

• Provide opportunities for value added services

Retail payment services for governmentBanks and PSPs support payments to and from

ministries and state institutions:

• Funds are always deposited and safeguarded

in a bank licenced by the CBI

• The bank or PSP provides a payment service

which

• moves money electronically between the

ministry account and the account chosen

by the other party

• Provides reporting and value added

services to the ministry

• The RPSI enables any bank or PSP to

send and receive the payments to all

other banks and PSPs so that customers

can choose their bank or PSP and are not

obliged to have accounts with all banks

and PSPs

Bank Bank

Customer Customer

Iraqi

Payment

Systems

Individuals

Businesses

Ministries

State institutions

Card PSPs

Mobile PSPs

Card PSPs

Mobile PSPs

PSP PSP

Retail payments from government

Each bank and PSP offers different services so

ministries (and state institutions) can choose

those that best meet each of its needs

• Salary, pension and social security

payment (direct credit) – Ministry provides

electronic details of payments to be made

to its bank or PSP, bank or PSP sends 1

electronic debit to ministry account,

distributes individual electronic payments

into accounts of the employees,

pensioners and social security

beneficiaries, and provides a report

• Payments to suppliers (direct credit) –

Ministry provides electronic details of

payments to be made to its bank or PSP,

bank or PSP sends 1 electronic debit to

ministry account, distributes individual

electronic payments into accounts of the

suppliers, and provides a report

Bank Banks

Customer Customers

Iraqi

Payment

Systems

Individuals

Businesses

Ministry or

state institution

PSP PSPs

Instructions

Payments

AdvicesReport

Retail payments to government

Each bank and PSP offers different services so

ministries (and state institutions) can choose

those that best meet each of its needs

• Bill payment – Ministry provides electronic

details of bills to be collected, Ministry’s

bank or PSP provides a bill to each payer

and a report of the bills paid to the Ministry

–Direct debit – Ministry’s bank or PSP

takes the money from payers’

accounts, sends 1 electronic credit to

the Ministry account

–Direct credit – Each payer sends

money from his/her account, Ministry’s

bank or PSP sends 1 electronic credit

to the Ministry account

–POS – Payer visits Ministry or its

agent and pays with a card at a POS,

Ministry’s bank or PSP sends 1

electronic credit to the Ministry

account

Bank Banks

Customer Customers

Iraqi

Payment

Systems

Individuals

Businesses

Ministry or

state institution

PSP PSPs

Instructions

Payments

AdvicesReportBillsBillsBills

The way forward

The Council of Ministers has instructed all

ministries and state organisations to migrate

from using cash to using electronic payments

to:

• Distribute cash to individuals and

businesses including paying employees

and suppliers

• Collect cash from individuals and

businesses including taxes, fees and utility

bills

Ministries and state organisations should now:

• Review their payment needs

• Seek competitive offers from banks and

PSPs

• Stop using cash and start using electronic

payments including card and mobile

payments for all payments to and from

businesses and individuals