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How money moves

How money moves in Kuwait

Written by

George Davis

on

Sep 15, 2023

/

How money moves

How money moves in Kuwait

Written by

George Davis

on

Sep 15, 2023

/

How money moves

How money moves in Kuwait

Written by

George Davis

on

Dec 13, 2023

How money moves: Kuwait
How money moves: Kuwait
How money moves: Kuwait

The short version

Situated on the Northwestern part of the Persian Gulf, we’re exploring all things payments, regulations and demographics in Kuwait (Arabic: دَوْلَةُ الْكُوَيْت ). Its rich history and strategic location speak to the uniqueness of the country. From a payments perspective, it holds many similarities with other Middle Eastern and North African (MENA) nations we’ve detailed in the “How Money Moves” blog series but, as with all countries in the region, comes with its own nuances when looking at the payment landscape.

The long version

The country’s name derives from the Arabic “kūt” meaning fort: a prosperous trade port which has emerged as today’s Kuwait city - one of the most urbanised populations globally. Notably, Kuwait is a Gulf Cooperation Council (GCC) member and has a population of 4.4 million. This geographically small nation is juxtaposed with its significant wealth per capita.

The local currency, the Kuwaiti Dinar (KWD) is the world’s highest valued in terms of price. The KWD is made up of an undisclosed basket of currencies, meaning it holds an aggregated and pegged value with little fluctuation, but isn’t directly pegged to any single currency and its basket composition can change in line with developments in the market.

Kuwait’s economy is driven by its sizeable oil and natural gas reserves. Due to the high demand for Kuwaiti oil reserves, the KWD is in high demand despite the sale of oil being denominated in US Dollars. To add, the revenue from oil sales are consciously used to support economic stimulation and infrastructure development by the government. Such proceeds contribute to 75% of fiscal revenue as Kuwait is a tax-free nation. This high wealth and high growth economy motivates global payment companies to look to this Gulf State as an exciting expansion opportunity.

How money moves in Kuwait

The pandemic years brought in a new era to the Kuwaiti payment landscape. Historically, cash was the preferred method of transacting and was swiftly shifted aside for a digital transformation to meet critical consumer needs during the Covid lockdown. A quick review of Kuwait’s tech penetration reinforces the environment that made this digital evolution possible, with 80% of Kuwaiti adults being banked, 84% owning smartphones and an impressive 99% having internet connectivity (soaring above the rest of MENA at rates of 46%, 43% and 47% respectively).

In terms of demographics, the majority of Kuwaitis (37%) are between the ages 18 and 44 years meaning their propensity for social media, digital marketplaces and online payments is significant. A recent consumer review revealed that Kuwaitis have maintained their trust and preference for contactless cards and digital wallet payments post-pandemic.

Graph showing metrics comparing Kuwait vs MENA average population adoption of smartphones, bank accounts and internet access

Kuwait is closely following Saudi Arabia as a remittance hub in the GCC, with over $17.7 billion of outbound remittances in 2022, giving it the ranking of sixth in the world. The large expat population and rising price of oil drive this remittance stat higher and higher year on year. Employment opportunities, boasting relatively well paying jobs and a good quality of life for locals, have attracted workers from across the globe to build careers in Kuwait. Major remittance corridors  include India and Egypt. Taking a look at digital remittances, the market is forecasted to reach $240.7 million by the end of 2023 with a projected annual growth rate of 7.89% until 2027. The market optimism is based on ongoing government efforts of infrastructure development to bolster employment opportunities for local and expat Kuwaitis.

The payments landscape in Kuwait is nuanced. Following the pandemic years, there has been a major drive by government and local financial services companies to encourage ingrained digital payments. Kuwait Vision 2035 underpins government action to “transform Kuwait into a regional and global financial and trade hub” triggering a steady rise in the cards and payments market. The collective market size is projected as $123.5 billion for 2023, with a compound annual growth rate (CAGR) of over 12% for the upcoming four years.

Some highlights in the Kuwaiti payments industry over recent years:

  • In 2013, Boloro, a mobile payment provider launched a contactless payment option for public transport in Kuwait which allowed customers to pay for their trip using their phone to tap-and-go.

  • To encourage card adoption, local banks started offering Sharia-compliant credit cards in 2015 and there was strategic investment by both Visa and Mastercard to stimulate the market further. Kuwait is reportedly one of the largest debit card markets in MENA. 

  • KNET is the country’s most popular payment service provider, which enables electronic banking services to all 11 banks in Kuwait established in 1992. It provides a host of services from point-of-sale (POS), ATM and even cheque book printing. The KNET payment gateway allows payment collection through bank-issued debit cards, processing 5 000 000 transactions per month. Almost 80% of all digital transactions in the nation are conducted via a KNET card. 

  • Within the past year, Kuwait saw the launch of Google Pay as well as Apple Pay, which were successfully activated after the Central Bank of Kuwait granted necessary banking licenses. Local Android and iPhone users can use their devices for contactless payment options.

Vision 2035 invites an exciting shift for payment newcomers. The golden thread of the agenda is to foster innovation and specifically, enable new fintechs to thrive in the local economy. This is good news for payment companies as the government appetite for newcomers is clear. Motivation is paired with infrastructure, as the government is building a ‘smart city’ harnessed by AI. Kuwait Finance House reinforces the progressive approach to tech-driven startups with its own Islamic investment fund, KISP Ventures, focussing purely on funding early-stage startups. Similar to other GCC states, CBK launched a ‘regulatory sandbox’ for fintechs to test products and services in a secure environment. Specifically the sandbox is conducted in four phases (from application, evaluation and experimentation to final approval) for the duration of one year. The key priorities of the sandbox are alignment with Kuwait’s environmental, social and governance (ESG) strategy. 

To uphold regulatory standards, CBK revamped its regulations related to electronic payment, settlements, storage of funds, and Buy Now Pay Later services which holds relevance for payment and Fintech companies. CBK’s E-Payment Regulations oversee services which “enable money withdrawal and deposit or processing of payment and settlement transactions through the electronic payment channels such as Automated Teller Machines (ATMs), Point of Sale (POS) devices and any service for transfer or issuing of funds, and/or obtaining means of electronic payment.”

In line with this, licenses are required for Electronic Payment Infrastructure Providers (EPIP) and Electronic Payment Agents or (EPA). An EPIP is defined as “any financial institution with the status of a shareholding company that is included in the register to perform all or part of the operations of electronic payment and settlement systems” while an EPA is “any financial institution with the form of a shareholding company that is included in the registry of the CBK to practice all or part of the activities of the EPIP.” Commonly, the EPIP is a designated Kuwaiti bank sponsoring the EPA, which monitors and ensures its compliance. The capital requirements for the EPIP is a steep KWD 1 million while an EPA’s capital requirement is KWD 20,000. 

Kuwait has taken strides to become an innovation hub for payment companies through regulatory changes and digital transformation reflecting its Vision 2035. A tech-savvy consumer base coupled with a prosperous economy lays the foundation for commercial opportunities.

We're excited to launch our products in Kuwait, if this small but innovative country is on your regional expansion plan reach out to us about supporting you on the journey to live.

The country’s name derives from the Arabic “kūt” meaning fort: a prosperous trade port which has emerged as today’s Kuwait city - one of the most urbanised populations globally. Notably, Kuwait is a Gulf Cooperation Council (GCC) member and has a population of 4.4 million. This geographically small nation is juxtaposed with its significant wealth per capita.

The local currency, the Kuwaiti Dinar (KWD) is the world’s highest valued in terms of price. The KWD is made up of an undisclosed basket of currencies, meaning it holds an aggregated and pegged value with little fluctuation, but isn’t directly pegged to any single currency and its basket composition can change in line with developments in the market.

Kuwait’s economy is driven by its sizeable oil and natural gas reserves. Due to the high demand for Kuwaiti oil reserves, the KWD is in high demand despite the sale of oil being denominated in US Dollars. To add, the revenue from oil sales are consciously used to support economic stimulation and infrastructure development by the government. Such proceeds contribute to 75% of fiscal revenue as Kuwait is a tax-free nation. This high wealth and high growth economy motivates global payment companies to look to this Gulf State as an exciting expansion opportunity.

How money moves in Kuwait

The pandemic years brought in a new era to the Kuwaiti payment landscape. Historically, cash was the preferred method of transacting and was swiftly shifted aside for a digital transformation to meet critical consumer needs during the Covid lockdown. A quick review of Kuwait’s tech penetration reinforces the environment that made this digital evolution possible, with 80% of Kuwaiti adults being banked, 84% owning smartphones and an impressive 99% having internet connectivity (soaring above the rest of MENA at rates of 46%, 43% and 47% respectively).

In terms of demographics, the majority of Kuwaitis (37%) are between the ages 18 and 44 years meaning their propensity for social media, digital marketplaces and online payments is significant. A recent consumer review revealed that Kuwaitis have maintained their trust and preference for contactless cards and digital wallet payments post-pandemic.

Graph showing metrics comparing Kuwait vs MENA average population adoption of smartphones, bank accounts and internet access

Kuwait is closely following Saudi Arabia as a remittance hub in the GCC, with over $17.7 billion of outbound remittances in 2022, giving it the ranking of sixth in the world. The large expat population and rising price of oil drive this remittance stat higher and higher year on year. Employment opportunities, boasting relatively well paying jobs and a good quality of life for locals, have attracted workers from across the globe to build careers in Kuwait. Major remittance corridors  include India and Egypt. Taking a look at digital remittances, the market is forecasted to reach $240.7 million by the end of 2023 with a projected annual growth rate of 7.89% until 2027. The market optimism is based on ongoing government efforts of infrastructure development to bolster employment opportunities for local and expat Kuwaitis.

The payments landscape in Kuwait is nuanced. Following the pandemic years, there has been a major drive by government and local financial services companies to encourage ingrained digital payments. Kuwait Vision 2035 underpins government action to “transform Kuwait into a regional and global financial and trade hub” triggering a steady rise in the cards and payments market. The collective market size is projected as $123.5 billion for 2023, with a compound annual growth rate (CAGR) of over 12% for the upcoming four years.

Some highlights in the Kuwaiti payments industry over recent years:

  • In 2013, Boloro, a mobile payment provider launched a contactless payment option for public transport in Kuwait which allowed customers to pay for their trip using their phone to tap-and-go.

  • To encourage card adoption, local banks started offering Sharia-compliant credit cards in 2015 and there was strategic investment by both Visa and Mastercard to stimulate the market further. Kuwait is reportedly one of the largest debit card markets in MENA. 

  • KNET is the country’s most popular payment service provider, which enables electronic banking services to all 11 banks in Kuwait established in 1992. It provides a host of services from point-of-sale (POS), ATM and even cheque book printing. The KNET payment gateway allows payment collection through bank-issued debit cards, processing 5 000 000 transactions per month. Almost 80% of all digital transactions in the nation are conducted via a KNET card. 

  • Within the past year, Kuwait saw the launch of Google Pay as well as Apple Pay, which were successfully activated after the Central Bank of Kuwait granted necessary banking licenses. Local Android and iPhone users can use their devices for contactless payment options.

Vision 2035 invites an exciting shift for payment newcomers. The golden thread of the agenda is to foster innovation and specifically, enable new fintechs to thrive in the local economy. This is good news for payment companies as the government appetite for newcomers is clear. Motivation is paired with infrastructure, as the government is building a ‘smart city’ harnessed by AI. Kuwait Finance House reinforces the progressive approach to tech-driven startups with its own Islamic investment fund, KISP Ventures, focussing purely on funding early-stage startups. Similar to other GCC states, CBK launched a ‘regulatory sandbox’ for fintechs to test products and services in a secure environment. Specifically the sandbox is conducted in four phases (from application, evaluation and experimentation to final approval) for the duration of one year. The key priorities of the sandbox are alignment with Kuwait’s environmental, social and governance (ESG) strategy. 

To uphold regulatory standards, CBK revamped its regulations related to electronic payment, settlements, storage of funds, and Buy Now Pay Later services which holds relevance for payment and Fintech companies. CBK’s E-Payment Regulations oversee services which “enable money withdrawal and deposit or processing of payment and settlement transactions through the electronic payment channels such as Automated Teller Machines (ATMs), Point of Sale (POS) devices and any service for transfer or issuing of funds, and/or obtaining means of electronic payment.”

In line with this, licenses are required for Electronic Payment Infrastructure Providers (EPIP) and Electronic Payment Agents or (EPA). An EPIP is defined as “any financial institution with the status of a shareholding company that is included in the register to perform all or part of the operations of electronic payment and settlement systems” while an EPA is “any financial institution with the form of a shareholding company that is included in the registry of the CBK to practice all or part of the activities of the EPIP.” Commonly, the EPIP is a designated Kuwaiti bank sponsoring the EPA, which monitors and ensures its compliance. The capital requirements for the EPIP is a steep KWD 1 million while an EPA’s capital requirement is KWD 20,000. 

Kuwait has taken strides to become an innovation hub for payment companies through regulatory changes and digital transformation reflecting its Vision 2035. A tech-savvy consumer base coupled with a prosperous economy lays the foundation for commercial opportunities.

We're excited to launch our products in Kuwait, if this small but innovative country is on your regional expansion plan reach out to us about supporting you on the journey to live.

The country’s name derives from the Arabic “kūt” meaning fort: a prosperous trade port which has emerged as today’s Kuwait city - one of the most urbanised populations globally. Notably, Kuwait is a Gulf Cooperation Council (GCC) member and has a population of 4.4 million. This geographically small nation is juxtaposed with its significant wealth per capita.

The local currency, the Kuwaiti Dinar (KWD) is the world’s highest valued in terms of price. The KWD is made up of an undisclosed basket of currencies, meaning it holds an aggregated and pegged value with little fluctuation, but isn’t directly pegged to any single currency and its basket composition can change in line with developments in the market.

Kuwait’s economy is driven by its sizeable oil and natural gas reserves. Due to the high demand for Kuwaiti oil reserves, the KWD is in high demand despite the sale of oil being denominated in US Dollars. To add, the revenue from oil sales are consciously used to support economic stimulation and infrastructure development by the government. Such proceeds contribute to 75% of fiscal revenue as Kuwait is a tax-free nation. This high wealth and high growth economy motivates global payment companies to look to this Gulf State as an exciting expansion opportunity.

How money moves in Kuwait

The pandemic years brought in a new era to the Kuwaiti payment landscape. Historically, cash was the preferred method of transacting and was swiftly shifted aside for a digital transformation to meet critical consumer needs during the Covid lockdown. A quick review of Kuwait’s tech penetration reinforces the environment that made this digital evolution possible, with 80% of Kuwaiti adults being banked, 84% owning smartphones and an impressive 99% having internet connectivity (soaring above the rest of MENA at rates of 46%, 43% and 47% respectively).

In terms of demographics, the majority of Kuwaitis (37%) are between the ages 18 and 44 years meaning their propensity for social media, digital marketplaces and online payments is significant. A recent consumer review revealed that Kuwaitis have maintained their trust and preference for contactless cards and digital wallet payments post-pandemic.

Graph showing metrics comparing Kuwait vs MENA average population adoption of smartphones, bank accounts and internet access

Kuwait is closely following Saudi Arabia as a remittance hub in the GCC, with over $17.7 billion of outbound remittances in 2022, giving it the ranking of sixth in the world. The large expat population and rising price of oil drive this remittance stat higher and higher year on year. Employment opportunities, boasting relatively well paying jobs and a good quality of life for locals, have attracted workers from across the globe to build careers in Kuwait. Major remittance corridors  include India and Egypt. Taking a look at digital remittances, the market is forecasted to reach $240.7 million by the end of 2023 with a projected annual growth rate of 7.89% until 2027. The market optimism is based on ongoing government efforts of infrastructure development to bolster employment opportunities for local and expat Kuwaitis.

The payments landscape in Kuwait is nuanced. Following the pandemic years, there has been a major drive by government and local financial services companies to encourage ingrained digital payments. Kuwait Vision 2035 underpins government action to “transform Kuwait into a regional and global financial and trade hub” triggering a steady rise in the cards and payments market. The collective market size is projected as $123.5 billion for 2023, with a compound annual growth rate (CAGR) of over 12% for the upcoming four years.

Some highlights in the Kuwaiti payments industry over recent years:

  • In 2013, Boloro, a mobile payment provider launched a contactless payment option for public transport in Kuwait which allowed customers to pay for their trip using their phone to tap-and-go.

  • To encourage card adoption, local banks started offering Sharia-compliant credit cards in 2015 and there was strategic investment by both Visa and Mastercard to stimulate the market further. Kuwait is reportedly one of the largest debit card markets in MENA. 

  • KNET is the country’s most popular payment service provider, which enables electronic banking services to all 11 banks in Kuwait established in 1992. It provides a host of services from point-of-sale (POS), ATM and even cheque book printing. The KNET payment gateway allows payment collection through bank-issued debit cards, processing 5 000 000 transactions per month. Almost 80% of all digital transactions in the nation are conducted via a KNET card. 

  • Within the past year, Kuwait saw the launch of Google Pay as well as Apple Pay, which were successfully activated after the Central Bank of Kuwait granted necessary banking licenses. Local Android and iPhone users can use their devices for contactless payment options.

Vision 2035 invites an exciting shift for payment newcomers. The golden thread of the agenda is to foster innovation and specifically, enable new fintechs to thrive in the local economy. This is good news for payment companies as the government appetite for newcomers is clear. Motivation is paired with infrastructure, as the government is building a ‘smart city’ harnessed by AI. Kuwait Finance House reinforces the progressive approach to tech-driven startups with its own Islamic investment fund, KISP Ventures, focussing purely on funding early-stage startups. Similar to other GCC states, CBK launched a ‘regulatory sandbox’ for fintechs to test products and services in a secure environment. Specifically the sandbox is conducted in four phases (from application, evaluation and experimentation to final approval) for the duration of one year. The key priorities of the sandbox are alignment with Kuwait’s environmental, social and governance (ESG) strategy. 

To uphold regulatory standards, CBK revamped its regulations related to electronic payment, settlements, storage of funds, and Buy Now Pay Later services which holds relevance for payment and Fintech companies. CBK’s E-Payment Regulations oversee services which “enable money withdrawal and deposit or processing of payment and settlement transactions through the electronic payment channels such as Automated Teller Machines (ATMs), Point of Sale (POS) devices and any service for transfer or issuing of funds, and/or obtaining means of electronic payment.”

In line with this, licenses are required for Electronic Payment Infrastructure Providers (EPIP) and Electronic Payment Agents or (EPA). An EPIP is defined as “any financial institution with the status of a shareholding company that is included in the register to perform all or part of the operations of electronic payment and settlement systems” while an EPA is “any financial institution with the form of a shareholding company that is included in the registry of the CBK to practice all or part of the activities of the EPIP.” Commonly, the EPIP is a designated Kuwaiti bank sponsoring the EPA, which monitors and ensures its compliance. The capital requirements for the EPIP is a steep KWD 1 million while an EPA’s capital requirement is KWD 20,000. 

Kuwait has taken strides to become an innovation hub for payment companies through regulatory changes and digital transformation reflecting its Vision 2035. A tech-savvy consumer base coupled with a prosperous economy lays the foundation for commercial opportunities.

We're excited to launch our products in Kuwait, if this small but innovative country 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

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