Main trends

The different forms of social networking sites including audio and video calls applications are becoming popular among Iraqi people, but their penetration is lagging in the sectors related to financial means of payment over mobile systems, where there is limited use except for some initial attempts. This is due to the lack of development of the financial system in Iraq which still depends on traditional methods of payment directly in cash, both in the governmental and private sectors.

Recently, there have been successful attempts to make an electronic switch for state employees, and private sector banks have started to provide electronic services on a limited scale. For example, the government pays pensions to most of the 3 million retirees around the country via a local credit card company called QiCard.

The free voice and video calls applications are widely popular among Iraqi people including WhatsApp and Viber primarily, then Telegram and Skype, as they offer lower costs of communication by using the Internet. Considering there are no official or unofficial statistics and even government institutions and universities lament the lack of data analysis, it can be noted that these apps are widely used by young people who live in urban centers, and less in rural and suburban areas due to lack of education and lack of Internet access.

Armed groups widely use free voice- and video-call applications to exploit the absence of censorship and the lack of statistics showing the identity of the user. Many investigations by Iraqi security forces revealed that armed groups such as ISIS have used these free instant communication apps rather than using paid platforms.

Facebook is the most popular site among Iraqi people compared with other social networking sites. According to the Internet World State statistic, as of December 2017, the number of Internet users in Iraq had reached about 19 million, mainly urban youths, out of a total population of about 39 million people. The number of Facebook users in Iraq is 17 million, or 43 percent of the population, ranking fourth among Arab countries after Egypt, Saudi Arabia and Algeria.

The number of Twitter users in the country has reached 400,000 and ranks after Saudi Arabia, Egypt, Algeria, UAE and Kuwait among the Arab countries, while the number of Instagram users has reached 100,000, ranking 13th among the Arabic countries. The number of LinkedIn users has reached 500,000 people, ranking as tenth among the Arabic countries.

These numbers refer to the tendency of Iraqi people to use social networking sites for entertainment purposes and to watch news rather than using it for professional business issues or to share experiences.

For example, Iraqis rely on Facebook to get news of violence episodes and bombings or killings, faster than the coverage provided by local traditional media. Iraqis also publish photos and videos of the victims of these bombings, which often bring many interactions, while other media do not publish similar content.

Iraq suffers from the major lack of advanced technology options, and large proportions of the population have never dealt with banks: Therefore it cannot be considered an ideal location for financial institutions that rely on sophisticated technical ideas or even for startups, because the population who deals with banks makes up less than 10 percent of the total, and the proportion of users of ATMs in Iraq is the lowest among the countries of the Middle East and North Africa.

In addition, some banks do not offer services to customers outside of their actual branch, and the proportion of smartphone users in the country is the lowest in the region at 17 percent.

Recently some private banks and companies began to adopt mobile money services provided by the Al-taif company, as well as the digital wallet app of Asiacell and Zain mobile phone companies.

These digital wallet apps work by allowing users to pay and receive money through their mobile phone balance. Depending on the service they subscribe to, they can pay for purchases or services through an SMS system, without the need of a bank account.

Also in April 2018 Iraq E-Gate For Financial Services Co signed a joint venture partnership agreement with Visa International, which aims to strengthen the efforts of financial inclusion and the dissemination of digital payment culture in Iraq.