Digital wallets are experiencing rapid growth in Iraq, driven by the proliferation of smartphones, the expansion of digital services, and government measures aimed at reducing reliance on cash to bolster the digital economy. Digital transformation experts indicate that the adoption of these wallets has reached unprecedented levels, despite varying usage rates across provinces and age groups. Demand is heavily concentrated in major cities and among the youth, while other areas require increased awareness and infrastructure development. Public trust in digital transactions has seen gradual improvement due to advanced banking systems and enhanced oversight, though it remains closely tied to transaction speed and data protection. Key security challenges include phishing attempts and data theft, necessitating the strengthening of authentication systems and broader cybersecurity awareness campaigns. Digital transformation is considered an effective tool in combating corruption and reducing tax evasion by promoting transparency and electronically documenting transactions. This limits the informal economy and provides accurate data for policymakers, which requires building effective public-private partnerships to ensure sustainable economic development.