The Role of Electronic Payment Methods in Enhancing Financial Inclusion

Iraq faces numerous challenges in implementing electronic payment methods due to its slow development of non-financial institutions; increased poverty rate, low rate of awareness about formal banking system, weak technical infrastructure, lack of economic stability and political instability. This study aims at determining the challenges encountered during the widespread implementation of electronic payment systems to achieve universal financial inclusion in Iraq and provide solutions to achieve the desirable outcomes. This cross-sectional quantitative study collected 958 responses from employees of different sectors who resided in Karbala Governorate, Iraq. The collected data was analyzed using PLS-SEM, and Cronbach’s alpha values were determined. The results confirmed the presence of a significant, positive relationship between the variables considered in the study. These results emphasized the role of electronic payments in expanding financial inclusion throughout the developing regions. Electronic payment methods have a positive and significant relationship with financial inclusion, and thus can help customers adopt formal banking systems, as well as earn their trust and confidence from transparency and security in financial transactions. It is the responsibility of the government to instill trust and confidentiality about the formal banking system to achieve financial inclusion and economic growth in the coming years.