The Central Bank of Iraq (CBI), through its Payment Systems Monitoring Department – Electronic Payment Division, has issued official instructions addressed to licensed banks and electronic payment service providers regarding the regulation and expansion of Point of Sale (POS) services in Iraq.

The circular aligns with the CBI’s strategy to increase POS deployment, reduce reliance on cash transactions, and promote financial inclusion and electronic payments across the Iraqi market.

Key Regulatory Measures

• Reduction of Merchant Discount Rate (MDR):
  The merchant commission has been reduced to 1% instead of 2%, as previously applied. This reduction applies for a two-year period, after which the rate may be reviewed based on market needs and service quality.
• Settlement Mechanism:
  POS transactions must be settled in Iraqi dinars through designated bank accounts opened for merchants for the purpose of receiving POS transaction proceeds.
• Prepaid Card Issuance:
  Merchants may be issued Iraqi dinar prepaid cards with a ceiling of IQD 13,000,000, provided that total monthly transactions do not exceed IQD 30,000,000.
• Scope of Eligible Merchants:
  POS services are intended for commercial activities, including retailers, service providers, professionals, craftsmen, workshops, transportation operators, and similar income-generating activities.

Banks and payment service providers are required to:

• Provide dedicated support services to merchants using POS devices
• Offer technical assistance, hotlines, and operational follow-up
• Monitor merchant performance and encourage continued POS usage
• Promote POS adoption through incentives or loyalty mechanisms, where applicable

Why This Circular Matters

• Expand cashless payment infrastructure
• Reduce operational costs for merchants
• Support small and medium businesses
• Enhance transparency and traceability of financial transactions
• Strengthen regulatory oversight of electronic payment services

Financial institutions and payment providers must ensure that their commercial arrangements, settlement processes, and merchant onboarding procedures are aligned with this circular.