Signs for Qi card ports, or menfedhs.

In the intricate labyrinth of Iraq's ancient alleyways, where past meets present, a seemingly inconspicuous shift is taking place. The loud exchanges of vendors, intermingling with the tantalizing scent of sizzling kebabs, veil a quiet revolution. This transformation, both ubiquitous yet unremarkable in its everydayness, is embodied by a small, plastic card — the Qi card.

Born out of the International Smart Card Company's (ISC) initiative to transition Iraq from its deep-rooted cash dependency towards the realms of digital finance, the Qi card was intended to streamline the distribution of government wages and pensions. It, however, is much more than a mechanism for digital payments.

Take Ali, a menfedh owner from Hilla, for instance. Operating a business that mimics an ATM, Ali provides cash to Qi cardholders in exchange for a fee. In this, he has unknowingly become an essential cog in Iraq's shifting power dynamics and a facilitator of a transformative financial system that's reshaping Iraq's economic, social, and cultural landscape.

Yet, the Qi card's influence extends far beyond its surface functionality. Beyond enabling digital payments, it is a vehicle for change, its course charted along the complex, convoluted pathways of Iraq's power structures. And as the Qi card's adoption accelerates, so does its impact - on the economy, on society, and on the life of every individual bearing its emblem.

While the Qi card is certainly emblematic of a transition towards a digital economy, the realities surrounding its adoption and usage are less idyllic. It serves as the primary mode of payment for the public sector — Iraq's largest employer — where individuals lacking bank accounts have no choice but to accept salaries and benefits via the card. This compulsory shift to digital banking, while beneficial on the surface, has in fact amplified the power and influence of the ISC.

However, what seems like a straightforward system of withdrawal at menfedh outlets is a bit more complicated. As described by Ali, the menfedh owner, he's the one providing liquidity for the government. He pays out salaries to Qi cardholders from his own funds, bearing the risk. At month's end, he recovers his outlay from al-Rafadain bank, a government-run entity. Ali and other menfedh owners are therefore not just service providers but risk-bearing intermediaries in a fragile gig economy.

Through the eyes of menfedh owners like Ali, a picture emerges of a society grappling with change, and of a financial instrument that is both a symbol and a tool of transformation. The Qi card's story is more than a tale of economic revolution; it's a mirror reflecting the struggles and aspirations of a nation caught between its past and its future.

Government jobs in Iraq, both during the Ba’athist era and after 2003, have always been viewed as stable, offering pensions and steady salaries. This is reflected in the numbers; a 2021 International Labor Organization report noted that 38 percent of employment in Iraq came from public sector jobs, over double the figure in the United States and nearly double that of France, a country with similar territorial size and higher population. Following the American-led invasion, successive governments have repeatedly used public sector employment as a way to calm frustrations about unemployment, each time hiring more people into government positions. An often discussed topic on employment is whether a government job is da’ami (permanent), the equivalent of a full-time, permanent position. I have witnessed fierce debates between government employees on who deserves to be da’ami, often with people claiming that they deserve to be da’ami if someone else is.

“The biggest sin in Iraqi life is to quit your government job for a private company”, a government psychiatrist said to me. “It makes it much harder to marry and people respect you less.”

The Qi card acts as the primary payment method for government employees to receive their salaries. Because Iraq remains a largely cash based society, the vast majority of employees do not have bank accounts, and bank branches are not easily available, making methods such as direct deposit or check mailing impossible. Instead, government employees are asked to use a Qi card, or a similar product, which provides them a virtual bank account at a specific bank. The vast majority of employees choose the state run Rafadain bank, which is partnered exclusively with Qi card. In addition to government employees, all pensioners and those who receive government benefits such as social security and martyr benefits are also forced to use this system, resulting in its embedding in Iraqi life.

This combination of banking services and payment processing allows the International Smart Card Company (ISC) to offer a suite of financial products and step in and collect fees. Every month, Aya, who works at the Ministry of Electricity, visits a menfedh in order to withdraw her salary. The cost to do so is 3000 Iraqi dinars per million dinars for the Qi card fee, and another 3000 Iraqi dinars for the person running in the menfedh. Aya, however, doesn’t mind the 6000 dinar fee, as she states it is “worth the convienance”, she told me.

The Qi card system is built on top of a series of shops known as menfedhs (or ports). These shops act as effectively ATMs, where Qi card holders can withdraw their money in exchange for a fee. These shops pay a specific amount to the ISC to start and receive the appropriate equipment, and then are effectively free to manage their own affairs.

Ali, a menfedh owner described the process, where the menfedh owner must first acquire some amount of money in order to pay salaries as Qi card holders come in. Using this money, Ali pays out salaries and benefits to individuals with the Qi card, collecting a fee along the way. At the end of every month, he then collects all the receipts paid out from his own money, and goes to al-Rafadain bank, one of the two government banks, in order to get all the money he paid out to Qi card owners.

Effectively, Ali and other menfedh owners are providing liquidity for the government and assuming the risk, in a system parallel to gig economy workers in other places in the world. By first requiring menfedh owners to source their own cash, menfedh owners often ask other, wealthier people in order to run their business, similar to how Uber and Lyft drivers take out loans in order to buy a car to start driving. Just like how gig economy workers assume significant personal risk and are encouraged to use their own assets, such as their cars or motorcycles, menfedh owners are encouraged to use their own money.

Within an office at the ISC.

The Qi card is administered by the International Smart Card Company (ISC), which was formed in 2008 with a joint investment from Iraq’s two largest government owned banks: al-Rafadain and al-Rasheed. The initial trials were based around pensioners, who had to previously gather in large numbers every month in front of government offices to collect their pensions.

Alaa, the HR manager of ISC, mentioned that the original idea of the Qi card was born during 2008, where there were significant concerns around suicide bombings. Due to the lack of electronic payments, pensioners would gather in large groups outside of government offices to collect the monthly payments. Alaa described how bombings at these sites prompted the first Qi card trial with a small group of 10,000 pensioners.

The success of pensioners led to other ministries to take note in later years, such as the Iraqi Ministry of Labor and the Ministry of Martyrs, who both also needed to make routine payments to large numbers of people.

In 2015, then Prime Minister Abadi introduced a series of failed financial reforms in order to combat Iraq’s cash crisis from low oil prices. Although large parts of these reforms stalled, the Central Bank of Iraq (CBI), spurred by the World Bank, pushed for financial inclusion and transparency measures through digital banking. Government ministries were then all ordered to move to digital payment mechanisms in order to reduce graft, and put out a general bid for contracts. At the time, the Qi card was the only available option, and subsequently all government ministries were moved onto it.

“Our biggest asset is our biometric database,” says Alaa. “None of our competitors have it,” referring to how the initial versions of the Qi card required a ten-fingerprint signature as well as facial recognition. Alaa noted how ISC has the largest database of biometric information on Iraqis, to the point where he believes it can be used for election purposes if needed.

Iraqis have largely acquiesced to this collection of biometric data. Um Noor, who receives monthly martyr benefits from the government, said “The Ministry of Martyrs said it was the only way to keep the card secure. The fingerprints of some people don’t work properly. My sister’s fingerprints don’t work most of the time so she uses the PIN code instead.”

The success of the Qi card has allowed ISC to become a key partner to the Iraqi government, with the Ministry of Justice and Ministry of Finance asking ISC to block specific users and people on the Qi card network. This transformation has made ISC one of the largest and wealthiest private companies within Iraq.

Like any wealth corporation in Iraq, ISC has become entangled within a variety of corruption scandals. Bahaa Abdulhussein, the founder and chairman of ISC, was arrested early in 2021 under corruption charges brought by the Anti-Corruption Court under the government of the previous prime minister. He was subsequently released earlier in 2023 under the new Prime Minister Sudani’s government, which quietly released Abdulhussein without bringing any specific charges.

Similarly, ISC and Qi card have been critized for their role in facilitating payments to fake employees of the Hashd al-Shaabi, the semi-formalized militia groups that arose to fight against the Islamic State, who have subsequently entered government under various parties and own various construction corporations, including a new corporation known as the Muhandis company.

Iraqis received the news of Abdulhussein’s release with mixed reactions. While employees of ISC saw it as vindication of Abdulhussein’s innocence, other Iraqis told me that this was simply more of the same wealthy groups at war with one another. Subsequent financial crises such as the dinar crisis earlier this year are still fresh for Iraqis, and with many of them having watched the Lebanese financial crises unfold since 2019, many Iraqis hold a strong distrust for banks and banking systems.

An Iraqi signs for an withdrawal using the Qi card.

Government ministries in Iraq each run their own accounting departments, and end up paying their own employees on different days. Ali, the menfedh shop owner in Hilla, described it as four different tranches. The revenue generating ministries, such as the Ministry of Oil and Ministry of Trade, are paid near the 15th of every month. Other vital ministries such as Defense and Higher Education are paid after near the 20th, followed by the other ministries near the 23rd. These days are not firm, as Iraqis often face frequent delays in salaries, and rely on a series of social media groups to announce when salaries have been disbursed.

This mechanism is a result of individual accounting, ministries that do not generate their own income must rely on the Ministry of Finance to transfer money in order to make salary payments. However, due to the various funding issues with the Iraqi government, the Ministry of Finance pays other ministries depending on their priority. Notably, pensioners and martyr beneficiaries are paid at the beginning of each month, or last in the payroll cycle beginning on the 15th.

The Qi card has placed itself in the middle of this economic turmoil among government incompetence: accounting issues and graft that hobble ministries have provided a potential market, where an intermediary comes in, assumes the risk, and then collects a toll in the middle. Teachers in Hilla described how the Qi card initially was only supposed to collect 1000 dinars per million, but that fee mysteriously rose to 4000, and now has decreased to 3000. A teacher in Hilla, a city of half a million people an hour south of Baghdad, spoke to me about how previously, if even 250 dinars (about 25 cents currently) was missing from his coworker’s salaries, the coworker would be furious. “Now, people accept the changing of the fees, because they have no recourse.”

Other workers echoed a similar sentiment, when asked about the Qi card fee, Umm Noor mentioned: “What can you do? It’s the same money spent to go to the bank or the ministries to get the cash.”

Menfedh owners also typically run additional services, such as offering loans or advances on salaries. Salaries from specific ministries, such as the Ministry of Education, are typically paid last and are often late, making it difficult for teachers to make ends meet. Ali’s menfedh steps in and offers advances, allowing people to make ends meet.

Accordingly, this shift in how the government provides benefits and salaries has led to a shift in Iraqi society, the most obvious in the transformation into digital money. Alaa stated “Iraqis must be pushed into electronic currency, because the Iraqis, once you force them to do something, they adapt very quickly.”

Beyond just digital cash, a more subtle shift is in how Iraqis, caught in the shadow of a massive corporation and a dysfunctional government, now rely on a network of menfedhs to survive. Some ministries in government fail to meet the basic standard of consistent paycheck payments, forcing Iraqis into the hands of the Qi card and its menfedh network.

A Qi card billboard celebrating Ramadan, on the highway between Hilla and Baghdad.

Qi card has become synonymous with debit and credit cards, Iraqis will often describe any plastic card bearing money as “Qi card”. What this has led to is a centralization of power within Baghdad, with both biometrics and monetary value more controlled by the central government. Alaa, the HR manager from the Internaitonal Smart Card company, told me that the Ministry of Justice and CBI reach out to the company in order to block specific transactions for particular individuals.

Visiting the ISC headquarters in Mansour, a wealthy district of Baghdad, is stepping across a strange threshold. Situated a hundred meters away from the statue of Abu Ja’far al-Mansour, which was destroyed as part of the chaos following the 2003 invasion and subsequently restored, the statue and the Qi card are both part of Iraqi modern life. The offices are sleek and shiny, reminiscent of any New York midtown finance firm. Soft ceiling lights and brushed birch furniture rest below the slogan of Qi card, which is لحياة اسهل, or “for an easier life.” In speaking with various employees, it was notable how the corporate culture was largely indistinguishable from an American tech company, with talk about flex work, HR management, hiring bars, and so on.

Working hand-in-hand with the ISC is the new Sudani government, which goes to great lengths to advertise digital currency and spending in dinars, instead of dollars. In the Hilla checkpoint, a new poster entreats Iraqis to use dinars instead of dollars to boost the national currency and support the national economy.

The ISC resembles other similar companies across the developing world, where highly wealthy corporations that resemble large international firms are built on top of a chain of gig work. In India, a company called Urban Company has created a service empire by building out various cleaning services, targeted towards families and employing women. Similarly, in Malaysia, large corporations have been set up by the state to manage funds gained from zakat (an 2.5% tithe obligation for Muslims). These corporations have cultures that are the exact same as other corporate cultures in the west, such as discussions about KPIs (key performance indicators, a term used to describe metrics used to track how well a company is performing).

ISC and Urban Company, in their growth, have carefully crafted a system where they act not just as facilitators, but controllers, akin to constructing an expressway and then profiting from every passing vehicle. Capitalizing on the public’s acceptance of payroll discrepancies, once a blatant symbol of state corruption, normalizing what would have formerly sparked outrage. These corporations have cleverly inserted themselves into the fragile dynamic between government workers and their supervisors, a relationship that once ensured a dependable monthly salary. Now, the government's role is minimized, while workers depend heavily on the menfedh owners, who serve as middlemen. However, the menfedh owners also represent an indictment of government inefficiency, as they're forced to take on the risk of late government payments, ensuring workers receive their salaries on time.

While ISC's foray into the digital financial realm has streamlined transactions and brought Iraq a step closer to the world of modern banking, it has also drawn Iraqis into a web of fee dependencies, opaque financial practices, and growing inequalities. The inextricable link between the Qi card and the government's payroll system has forced Iraqi citizens to adjust their lifestyles to the new normal, often without an alternative.

Yet, in an ironic twist, the Qi card and the network of menfedhs have become an unexpected lifeline for many Iraqis amid government shortcomings and economic instability. They provide essential services, from salary advances to convenient financial transactions, inadvertently buffering the blows of government inefficiencies.

The Qi card is more than just a symbol of Iraq's march towards financial digitization. It's a window into the country's struggle for modernity against the backdrop of deep-seated bureaucracy and a cash-dependent tradition. It mirrors a nation caught between innovation and corruption, bureaucracy and efficiency, tradition and modernity.

Various Qi card logos in Karrada.