Following months of consultation and groundwork, the Central Bank of Iran (CBI) has finally reviewed and approved regulations for electronic wallets in a bid to digitize its fully-fledged Islamic financial system.
The long-awaited framework would facilitate digital micropayments through the banking system. Under the new rules, banks and credit institutions would be allowed to issue digital wallets connected to customers’ accounts.
This follows a previous ruling allowing fintech companies to offer digital wallet services, which also paved the way for fintech companies to work with banks (up to three banks and credit institutions) to facilitate e-wallet services.
In 2020, the Money and Credit Council of the central bank gave its initial greenlight toward digital wallets, provided the use of such instruments do not lead to money creation or expand the money supply.
Cashless payments are popular in the 82 million-strong Islamic Republic. Iran’s card payment market is one of the most developed in the region, with a penetration rate of 4.3 cards per individual in 2018, the highest relative to Kuwait, Israel, the UAE, Bahrain, Saudi Arabia and Oman, according to a recent study by Research and Markets. This is due to a combination of market factors including a high banking penetration rate and strong government push for electronic payments. Promoting e-wallets is one of the many initiatives by the Iranian authorities to establish a cashless society.