Philip Corper Consulting t: +44 1550 740133 Gilfach yr Allt, Llanddeusant, Llangadog SA19 9ST United Kingdom m: +44 7802 416028 e: consulting@philipcorper.com Skype: philcorper

Implementation of a national switch for card payments and a national mobile payment system for the Central Bank of Iraq Background Iraq has a cash based economy which is inefficient, stifles economic growth, and fosters corruption, money laundering, terrorism and crime. Competition in financial services is limited by over-regulation and the dominance of the government and state owned entities. Shell, the oil company, reported that inefficiency in payment and other procedures cost the Iraqi oil industry $6 billion in 2013. Less than 4% of the population has access to bank accounts and only 0.2% has a payment card. Those that do have bank accounts withdraw any money deposited instantly because they do not trust the banks and cannot spend electronic money because there are almost no Points of Sale (POS). The solution is indicated by the 97% of the population that have mobile phones and love to use them. USAID designed the Financial Development Project (FDP) to help the Iraqi government to address these issues and commissioned Philip Corper Consulting as executive technical experts through its prime implementing partner AECOM International. Building consensus and commitment The Central Bank of Iraq (CBI) is committed to modernizing payments in Iraq. CBI ownership of the payments problem and leadership to solve it is the single most important contributor to the success of our work. USAID encouraged and supported the Governor and senior management of the CBI through its flagship FDP project throughout selection and implementation of the national card payments switch and national mobile payments system. With our assistance, FDP trained and mentored CBI managers and staff and helped CBI to manage an international consortium of three vendors to install leading edge technology. FDP helped the CBI to encourage and support private sector banks and mobile network operators to participate in the payment systems and develop their payments businesses. FDP also assisted CBI to draw in MasterCard and Visa to support their members in Iraq, to help them to develop the payments market, and to reach out to their government, business and personal customers with education, marketing and publicity to encourage them to migrate away from cash. In addition, FDP helped the CBI to manage its relations with the Prime Minister, Communications Minister, Federal Supreme Audit Board, Financial Services Tribunal and Shura Council to reform banking laws and issue payments regulations to ensure the effective regulation of payments whilst maintaining the independence of the CBI. Providing technical expertise The broad banking and payment strategy skills of Philip Corper Consulting helped the CBI to define a practical project to introduce card and mobile payments to Iraq, and to put in place an interoperable, open, regulated framework which will assure its success. Thirty years’ experience of leading innovation in electronic financial services and payments around the world and managing complex implementation projects gave us the credibility to assist USAID and the CBI to implement their large scale program. Detailed technical knowledge of banking and payment systems was complemented by the sound business skills which will ensure the commercial success of participants within an effective regulatory environment. Delivering outcomes The immediate outcomes have already been achieved. Considerable investment by USAID on behalf of the American people has been matched by $15 million cash expenditure by the CBI and $14 million by the private sector as at May 2014, with much more still to come. When the payment systems are fully operational, they will drive development of the banking and mobile telecommunications sectors, reducing costs, creating over 20,000 new jobs, and increasing profits. The improved payment services will increase financial inclusion, reduce business costs, increase business efficiency, and increase investment and economic growth from 6% to 13% per year.