Products

Use cases

Developers

Company

/

How money moves

How money moves in Bahrain

Written by

George Davis

on

Oct 18, 2023

/

How money moves

How money moves in Bahrain

Written by

George Davis

on

Oct 18, 2023

/

How money moves

How money moves in Bahrain

Written by

George Davis

on

Dec 13, 2023

How money moves: BHR
How money moves: BHR
How money moves: BHR

The short version

The Kingdom of Bahrain is at the leading edge of MENA payment regulations and a hub for Fintechs in the region. This archipelago has taken steps to diversify away from an oil reliance and move towards the private sector leading economic activity. We're excited about this growing market as a centre for digital payments in MENA.

The long version

The Kingdom of Bahrain (Arabic: مملكة البحرين) is a small Arab archipelago, across the waters of Saudi Arabia and Qatar. Its name originates from Arabic “al-baḥrayn”, meaning two seas. From the Bronze age, Bahrain has been a bustling trading port for the region. Since the 18th century, the constitutional monarchy has been led by the Khalīfah family (Āl Khalīfah). It is the third smallest country in Asia and one of the first nations to discover oil in the Gulf. However, unlike its neighbours, Bahrain does not have as significant oil stores which encouraged the economy to diversify away from an oil reliance, and move towards sectors including financial services, tourism and communications.

Bahrain’s nominal gross domestic product (GDP) has been on a steady incline over the past two decades. Most recently, the economy grew by 4.9% (to a GDP of $44,390,820,479) in 2022, the highest growth rate since 2013. This was in context of the 2021 governmental economic recovery plan, “under which more than $30 billion will be invested in the country's infrastructure.” The plan aims to boost financial stability and economic outcomes through investment, increased VAT (from 5% to 10%) and job creation. Tourism is another pillar which the government has actively invested in, given the Kingdom’s oceanic location and cosmopolitan cities, attracting visitors from other Gulf states.

Introduced in 1965, the Bahraini Dinar (BD or Arabic: د.ب ) is the national currency, governed by the Central Bank of Bahrain (CBB). It is currently pegged to the US Dollar at 1 BD: $2.659 and the world’s second most valuable currency, behind the Kuwaiti Dinar. Its value is largely underpinned by the country’s political and economic stability. Interestingly, Saudi Riyals are also accepted domestically. Bahrain is a member of the World Trade Organisation (WTO) and the Gulf Cooperation Council (GCC), and has free trade agreements (FTA) with the United States, Singapore and the EFTA  States.

The population of Bahrain (~1.5 million people) is predominantly Arab, with an estimated 46% native-born Bahraini while the rest are predominantly from Palestine, Oman and Saudi. Most of the non-Arab population are from Asian countries (45.5%), including India, Pakistan and the Philippines. Over the years, the population has consistently grown at 2% annually. Despite the birth rate being below average, there is a steady influx of expats, giving Bahrain the sixth highest immigration rate globally. In 2023, the median age was calculated at 33.6 years old. Majority of Bahrainis are between 30 - 44 years old (31.7%), followed by those between 15 - 29 years old (24.7%) and 45 - 59 years old (18.2%). Only 7.3% of the population are over 60 years old. The emerging slant towards Millennials and Gen Zs provides a platform for modernization within the payments landscape. 

Given the substantial expat population in Bahrain, the remittance market is on the rise with a growth rate of 9.55% year on year for the next five years. The remittance market is forecasted to reach $166 million this year alone. Earlier this year, Beyon Money saw this opportunity to collaborate with international payments company TerraPay to power remittance outflows from Bahrain to key countries across Asia and Africa. There is a clear need for multiple remittance corridors that enable expats to send money internationally from Bahrain using modern payments infrastructure.

Bahrain Economic Vision 2030 describes the government’s aim to “work towards the growth and diversification of the national economy” - shifting away from an oil-centric economy towards a strong private sector focus. It’s viewed that Bahrain is trailblazing this strategic transition across the GCC. The plan details that the private sector should lead Bahrain’s economic development by 2030, welcoming local and foreign business and attracting investment with Bahrain’s “high-quality public service, cutting-edge infrastructure, and an appealing living environment”. The Kingdom has also allowed 100% foreign ownership for business and visas which accepts freelancing for expats.

Off the back of Vision 2023, the landscape for payments and Fintech is at an exciting inflection point today. According to a recent Fintech report, the number of fintechs has increased by 100% since 2018, with over 367 companies and an estimated 13 700 in the industry’s workforce. Bahrain is positioning itself as a fintech hub in the region - attracting both traditional and Shariah compliant fintechs. 

Turning to payments, here are some highlights in the Kingdom: 

  • BENEFIT (“Bahrain's Electronic Network For Financial Transactions”) is the leading card-based payment service in the country. In the first half of this year, BENEFITPay - the local payment and money transfer app - processed over 161 million transactions for 1.3 million users, a 42.4% rise in volume compared to the same timeframe in 2022. This shows the appetite for Bahrainis to send, receive and pay using modern payment methods. Part of the BENEFIT services, locals can directly pay bills using Fawateer, the Kingdom’s national Electronic Bill Payment and Presentment (EBPP) service. Last year, there were an impressive 12 million bills paid through Fawateer. 

  • A subsidiary of the Bank of Bahrain and Kuwait, CrediMax is the Kingdom’s biggest credit card issuer and acquirer. 

  • Electronic Fund Transfer System (EFTS) was launched in 2015 to enable instant interbank transfers, known as Fawri+, for low value transactions.  

  • In 2018, Bahrain outlined rules on Open Banking which were later accompanied by a framework on data sharing and compliance in 2020. According to The Digital Payment Landscape Report 2022, the CBB is now focusing on moving to extend Open Banking to Open Finance which “allows third-party providers (TPPs) to access customers’ account data and initiate payments”.

  • In 2019, contactless payments were introduced to enable effortless checkout options for the growing, tech-driven Millennial population in Bahrain. An estimated 53% of card transactions are now contactless. 

  • In December 2020, CBB in partnership with Saudi Central Bank (SAMA) first participated in the  Arabian Gulf System for financial Automated Quick Payment Transfer (AFAQ) cross-currency service. This is a Real Time Gross Settlement  (RTGS) service for cross-border and cross-currency payments between GCC states. 

  • Latest CBB data shows consumer behaviour is shifting as the demand for digital payments is growing. Over 14 million online transactions were recorded in January this year, which is a 13% increase year-on-year while ATM withdrawals have fallen 9.8%.

From a regulatory perspective, CBB provides an innovative approach to governance in the region. For example, CBB is leading the Open Banking mandate in MENA. Vision 2030’s aim to attract fintechs is backed by the Central Bank of Bahrain (CBB) with its launch of the regulatory sandbox in 2017 to support local and foreign startups to test their products in a safe ecosystem. The sandbox is available for 9 months, and with a maximum extension of 3 months for product testing. Volume 5 in the CBB Rulebook details the necessary laws and regulations for payment companies operating in Bahrain. Here are the two key payment licenses in Bahrain:

1. Payment Services Provider (PSP) License: This license enables companies to provide payment services; such as EFTs, card issuing, and processing payments. 

2. Ancillary Service Provider License: For a PSP wanting to issue cards, provide digital wallets or process Stored Value Cards, they will require this license by CBB. This is similar to the Stored Value Facilitator (SVF) license in UAE, or E Money in the UK or EU.

The minimum bank guarantee and capital requirement for PSPs established by the Central bank are BD 100,000 and BD 50,000 respectively.

The Kingdom of Bahrain is uniquely positioned for payment companies as an ever expanding economy, open to change. Considered a future-focused regulation hub coupled with a digital transformation, it is a playground for payment innovation. Bahrain presents an exciting market for Fuse. If this GCC archipelago is on your regional expansion plan, reach out to us about supporting you on the journey to live.

The Kingdom of Bahrain (Arabic: مملكة البحرين) is a small Arab archipelago, across the waters of Saudi Arabia and Qatar. Its name originates from Arabic “al-baḥrayn”, meaning two seas. From the Bronze age, Bahrain has been a bustling trading port for the region. Since the 18th century, the constitutional monarchy has been led by the Khalīfah family (Āl Khalīfah). It is the third smallest country in Asia and one of the first nations to discover oil in the Gulf. However, unlike its neighbours, Bahrain does not have as significant oil stores which encouraged the economy to diversify away from an oil reliance, and move towards sectors including financial services, tourism and communications.

Bahrain’s nominal gross domestic product (GDP) has been on a steady incline over the past two decades. Most recently, the economy grew by 4.9% (to a GDP of $44,390,820,479) in 2022, the highest growth rate since 2013. This was in context of the 2021 governmental economic recovery plan, “under which more than $30 billion will be invested in the country's infrastructure.” The plan aims to boost financial stability and economic outcomes through investment, increased VAT (from 5% to 10%) and job creation. Tourism is another pillar which the government has actively invested in, given the Kingdom’s oceanic location and cosmopolitan cities, attracting visitors from other Gulf states.

Introduced in 1965, the Bahraini Dinar (BD or Arabic: د.ب ) is the national currency, governed by the Central Bank of Bahrain (CBB). It is currently pegged to the US Dollar at 1 BD: $2.659 and the world’s second most valuable currency, behind the Kuwaiti Dinar. Its value is largely underpinned by the country’s political and economic stability. Interestingly, Saudi Riyals are also accepted domestically. Bahrain is a member of the World Trade Organisation (WTO) and the Gulf Cooperation Council (GCC), and has free trade agreements (FTA) with the United States, Singapore and the EFTA  States.

The population of Bahrain (~1.5 million people) is predominantly Arab, with an estimated 46% native-born Bahraini while the rest are predominantly from Palestine, Oman and Saudi. Most of the non-Arab population are from Asian countries (45.5%), including India, Pakistan and the Philippines. Over the years, the population has consistently grown at 2% annually. Despite the birth rate being below average, there is a steady influx of expats, giving Bahrain the sixth highest immigration rate globally. In 2023, the median age was calculated at 33.6 years old. Majority of Bahrainis are between 30 - 44 years old (31.7%), followed by those between 15 - 29 years old (24.7%) and 45 - 59 years old (18.2%). Only 7.3% of the population are over 60 years old. The emerging slant towards Millennials and Gen Zs provides a platform for modernization within the payments landscape. 

Given the substantial expat population in Bahrain, the remittance market is on the rise with a growth rate of 9.55% year on year for the next five years. The remittance market is forecasted to reach $166 million this year alone. Earlier this year, Beyon Money saw this opportunity to collaborate with international payments company TerraPay to power remittance outflows from Bahrain to key countries across Asia and Africa. There is a clear need for multiple remittance corridors that enable expats to send money internationally from Bahrain using modern payments infrastructure.

Bahrain Economic Vision 2030 describes the government’s aim to “work towards the growth and diversification of the national economy” - shifting away from an oil-centric economy towards a strong private sector focus. It’s viewed that Bahrain is trailblazing this strategic transition across the GCC. The plan details that the private sector should lead Bahrain’s economic development by 2030, welcoming local and foreign business and attracting investment with Bahrain’s “high-quality public service, cutting-edge infrastructure, and an appealing living environment”. The Kingdom has also allowed 100% foreign ownership for business and visas which accepts freelancing for expats.

Off the back of Vision 2023, the landscape for payments and Fintech is at an exciting inflection point today. According to a recent Fintech report, the number of fintechs has increased by 100% since 2018, with over 367 companies and an estimated 13 700 in the industry’s workforce. Bahrain is positioning itself as a fintech hub in the region - attracting both traditional and Shariah compliant fintechs. 

Turning to payments, here are some highlights in the Kingdom: 

  • BENEFIT (“Bahrain's Electronic Network For Financial Transactions”) is the leading card-based payment service in the country. In the first half of this year, BENEFITPay - the local payment and money transfer app - processed over 161 million transactions for 1.3 million users, a 42.4% rise in volume compared to the same timeframe in 2022. This shows the appetite for Bahrainis to send, receive and pay using modern payment methods. Part of the BENEFIT services, locals can directly pay bills using Fawateer, the Kingdom’s national Electronic Bill Payment and Presentment (EBPP) service. Last year, there were an impressive 12 million bills paid through Fawateer. 

  • A subsidiary of the Bank of Bahrain and Kuwait, CrediMax is the Kingdom’s biggest credit card issuer and acquirer. 

  • Electronic Fund Transfer System (EFTS) was launched in 2015 to enable instant interbank transfers, known as Fawri+, for low value transactions.  

  • In 2018, Bahrain outlined rules on Open Banking which were later accompanied by a framework on data sharing and compliance in 2020. According to The Digital Payment Landscape Report 2022, the CBB is now focusing on moving to extend Open Banking to Open Finance which “allows third-party providers (TPPs) to access customers’ account data and initiate payments”.

  • In 2019, contactless payments were introduced to enable effortless checkout options for the growing, tech-driven Millennial population in Bahrain. An estimated 53% of card transactions are now contactless. 

  • In December 2020, CBB in partnership with Saudi Central Bank (SAMA) first participated in the  Arabian Gulf System for financial Automated Quick Payment Transfer (AFAQ) cross-currency service. This is a Real Time Gross Settlement  (RTGS) service for cross-border and cross-currency payments between GCC states. 

  • Latest CBB data shows consumer behaviour is shifting as the demand for digital payments is growing. Over 14 million online transactions were recorded in January this year, which is a 13% increase year-on-year while ATM withdrawals have fallen 9.8%.

From a regulatory perspective, CBB provides an innovative approach to governance in the region. For example, CBB is leading the Open Banking mandate in MENA. Vision 2030’s aim to attract fintechs is backed by the Central Bank of Bahrain (CBB) with its launch of the regulatory sandbox in 2017 to support local and foreign startups to test their products in a safe ecosystem. The sandbox is available for 9 months, and with a maximum extension of 3 months for product testing. Volume 5 in the CBB Rulebook details the necessary laws and regulations for payment companies operating in Bahrain. Here are the two key payment licenses in Bahrain:

1. Payment Services Provider (PSP) License: This license enables companies to provide payment services; such as EFTs, card issuing, and processing payments. 

2. Ancillary Service Provider License: For a PSP wanting to issue cards, provide digital wallets or process Stored Value Cards, they will require this license by CBB. This is similar to the Stored Value Facilitator (SVF) license in UAE, or E Money in the UK or EU.

The minimum bank guarantee and capital requirement for PSPs established by the Central bank are BD 100,000 and BD 50,000 respectively.

The Kingdom of Bahrain is uniquely positioned for payment companies as an ever expanding economy, open to change. Considered a future-focused regulation hub coupled with a digital transformation, it is a playground for payment innovation. Bahrain presents an exciting market for Fuse. If this GCC archipelago is on your regional expansion plan, reach out to us about supporting you on the journey to live.

The Kingdom of Bahrain (Arabic: مملكة البحرين) is a small Arab archipelago, across the waters of Saudi Arabia and Qatar. Its name originates from Arabic “al-baḥrayn”, meaning two seas. From the Bronze age, Bahrain has been a bustling trading port for the region. Since the 18th century, the constitutional monarchy has been led by the Khalīfah family (Āl Khalīfah). It is the third smallest country in Asia and one of the first nations to discover oil in the Gulf. However, unlike its neighbours, Bahrain does not have as significant oil stores which encouraged the economy to diversify away from an oil reliance, and move towards sectors including financial services, tourism and communications.

Bahrain’s nominal gross domestic product (GDP) has been on a steady incline over the past two decades. Most recently, the economy grew by 4.9% (to a GDP of $44,390,820,479) in 2022, the highest growth rate since 2013. This was in context of the 2021 governmental economic recovery plan, “under which more than $30 billion will be invested in the country's infrastructure.” The plan aims to boost financial stability and economic outcomes through investment, increased VAT (from 5% to 10%) and job creation. Tourism is another pillar which the government has actively invested in, given the Kingdom’s oceanic location and cosmopolitan cities, attracting visitors from other Gulf states.

Introduced in 1965, the Bahraini Dinar (BD or Arabic: د.ب ) is the national currency, governed by the Central Bank of Bahrain (CBB). It is currently pegged to the US Dollar at 1 BD: $2.659 and the world’s second most valuable currency, behind the Kuwaiti Dinar. Its value is largely underpinned by the country’s political and economic stability. Interestingly, Saudi Riyals are also accepted domestically. Bahrain is a member of the World Trade Organisation (WTO) and the Gulf Cooperation Council (GCC), and has free trade agreements (FTA) with the United States, Singapore and the EFTA  States.

The population of Bahrain (~1.5 million people) is predominantly Arab, with an estimated 46% native-born Bahraini while the rest are predominantly from Palestine, Oman and Saudi. Most of the non-Arab population are from Asian countries (45.5%), including India, Pakistan and the Philippines. Over the years, the population has consistently grown at 2% annually. Despite the birth rate being below average, there is a steady influx of expats, giving Bahrain the sixth highest immigration rate globally. In 2023, the median age was calculated at 33.6 years old. Majority of Bahrainis are between 30 - 44 years old (31.7%), followed by those between 15 - 29 years old (24.7%) and 45 - 59 years old (18.2%). Only 7.3% of the population are over 60 years old. The emerging slant towards Millennials and Gen Zs provides a platform for modernization within the payments landscape. 

Given the substantial expat population in Bahrain, the remittance market is on the rise with a growth rate of 9.55% year on year for the next five years. The remittance market is forecasted to reach $166 million this year alone. Earlier this year, Beyon Money saw this opportunity to collaborate with international payments company TerraPay to power remittance outflows from Bahrain to key countries across Asia and Africa. There is a clear need for multiple remittance corridors that enable expats to send money internationally from Bahrain using modern payments infrastructure.

Bahrain Economic Vision 2030 describes the government’s aim to “work towards the growth and diversification of the national economy” - shifting away from an oil-centric economy towards a strong private sector focus. It’s viewed that Bahrain is trailblazing this strategic transition across the GCC. The plan details that the private sector should lead Bahrain’s economic development by 2030, welcoming local and foreign business and attracting investment with Bahrain’s “high-quality public service, cutting-edge infrastructure, and an appealing living environment”. The Kingdom has also allowed 100% foreign ownership for business and visas which accepts freelancing for expats.

Off the back of Vision 2023, the landscape for payments and Fintech is at an exciting inflection point today. According to a recent Fintech report, the number of fintechs has increased by 100% since 2018, with over 367 companies and an estimated 13 700 in the industry’s workforce. Bahrain is positioning itself as a fintech hub in the region - attracting both traditional and Shariah compliant fintechs. 

Turning to payments, here are some highlights in the Kingdom: 

  • BENEFIT (“Bahrain's Electronic Network For Financial Transactions”) is the leading card-based payment service in the country. In the first half of this year, BENEFITPay - the local payment and money transfer app - processed over 161 million transactions for 1.3 million users, a 42.4% rise in volume compared to the same timeframe in 2022. This shows the appetite for Bahrainis to send, receive and pay using modern payment methods. Part of the BENEFIT services, locals can directly pay bills using Fawateer, the Kingdom’s national Electronic Bill Payment and Presentment (EBPP) service. Last year, there were an impressive 12 million bills paid through Fawateer. 

  • A subsidiary of the Bank of Bahrain and Kuwait, CrediMax is the Kingdom’s biggest credit card issuer and acquirer. 

  • Electronic Fund Transfer System (EFTS) was launched in 2015 to enable instant interbank transfers, known as Fawri+, for low value transactions.  

  • In 2018, Bahrain outlined rules on Open Banking which were later accompanied by a framework on data sharing and compliance in 2020. According to The Digital Payment Landscape Report 2022, the CBB is now focusing on moving to extend Open Banking to Open Finance which “allows third-party providers (TPPs) to access customers’ account data and initiate payments”.

  • In 2019, contactless payments were introduced to enable effortless checkout options for the growing, tech-driven Millennial population in Bahrain. An estimated 53% of card transactions are now contactless. 

  • In December 2020, CBB in partnership with Saudi Central Bank (SAMA) first participated in the  Arabian Gulf System for financial Automated Quick Payment Transfer (AFAQ) cross-currency service. This is a Real Time Gross Settlement  (RTGS) service for cross-border and cross-currency payments between GCC states. 

  • Latest CBB data shows consumer behaviour is shifting as the demand for digital payments is growing. Over 14 million online transactions were recorded in January this year, which is a 13% increase year-on-year while ATM withdrawals have fallen 9.8%.

From a regulatory perspective, CBB provides an innovative approach to governance in the region. For example, CBB is leading the Open Banking mandate in MENA. Vision 2030’s aim to attract fintechs is backed by the Central Bank of Bahrain (CBB) with its launch of the regulatory sandbox in 2017 to support local and foreign startups to test their products in a safe ecosystem. The sandbox is available for 9 months, and with a maximum extension of 3 months for product testing. Volume 5 in the CBB Rulebook details the necessary laws and regulations for payment companies operating in Bahrain. Here are the two key payment licenses in Bahrain:

1. Payment Services Provider (PSP) License: This license enables companies to provide payment services; such as EFTs, card issuing, and processing payments. 

2. Ancillary Service Provider License: For a PSP wanting to issue cards, provide digital wallets or process Stored Value Cards, they will require this license by CBB. This is similar to the Stored Value Facilitator (SVF) license in UAE, or E Money in the UK or EU.

The minimum bank guarantee and capital requirement for PSPs established by the Central bank are BD 100,000 and BD 50,000 respectively.

The Kingdom of Bahrain is uniquely positioned for payment companies as an ever expanding economy, open to change. Considered a future-focused regulation hub coupled with a digital transformation, it is a playground for payment innovation. Bahrain presents an exciting market for Fuse. If this GCC archipelago is on your regional expansion plan, reach out to us about supporting you on the journey to live.

George Davis, Fuse Co-Founder & CEO
George Davis, Fuse Co-Founder & CEO

George Davis

, Co-Founder & CEO

at Fuse

George Davis

, Co-Founder & CEO

Co-Founder & CEO

at Fuse

Fuse

Subscribe to receive Fuse news and product updates.

Subscribe to receive Fuse news and product updates.

Subscribe to receive Fuse news and product updates.