A safe environment and low levels of street crime mean cash remains a popular payment instrument in Kuwait, but the emergence of contactless and growth in Islamic banking are changing consumer attitudes and preferences. Recent Timetric research provides an overview of the payment scene in the Gulf state

Cash remains the preferred mode of retail payment in Kuwait, primarily for transactions of less than $100 (KUD30.5). Kuwait’s broadly safe environment, with low levels of pickpocketing, snatching and mugging, encourages use of cash. However, payment cards are also gradually gaining prominence as payment infrastructure improves, new technology such contactless develops, and Islamic banking gains ground.

In October 2009, Visa aligned with the National Bank of Kuwait and Zain for the first trial of NFC technology in the country. This technology is largely accepted by Kuwaiti merchants, and offers low-value payments such as NFC wallets and over-the-air card-provisioning software.

Mobile payment provider Boloro partnered with Zain in February 2013, to conduct a pilot programme on public transport in Kuwait. Bus passengers were provided contactless stickers to pay fares by tapping phone against payment terminals on selected buses. Consumers were also allowed to make online and in-store payments using contactless Boloro stickers.

In September 2015, Gulf Bank partnered with Knet and Mastercard to launch a contactless POS terminal, which can be used by merchants to accept NFC payments from all payment cards. In February 2016, Boubyan Bank partnered with digital security company Oberthur Technologies to offer contactless payment cards in Kuwait.
Frequency of use per card in Kuwait was 52.7 in 2015 – higher than the UAE (47.6),  Oman (23.1) and Bahrain (16.9).

Preference for Sharia-compliant banking

The growth of Islamic banking has increased competition in the domestic financial sector. The share of Islamic banking assets in Kuwait was the fifth-largest in the world as of June 2014. This has led many conventional banks to convert to Islamic banks.

Commercial Bank of Kuwait, for instance, became an Islamic bank in 2014. Kuwait International Bank and Ahli United Bank also converted in 2007 and 2010 respectively, and have modified and improved their product offerings accordingly. Banks have also started offering Sharia-compliant credit cards. Kuwait Finance House launched the Sharia-compliant Visa Signature credit card in April 2015. Kuwait International Bank and Ahli United Bank also offer Sharia-compliant credit cards.

Integrated GCC POS service

Debit cards accounted for 89.9% of the overall payment card transaction value in 2015. The central banks and monetary authorities of the Gulf Cooperation Council (GCC) countries launched the integrated GCC POS service in April 2014, allowing debit cardholders to make purchases at all POS terminals in the GCC region, in an aim to reduce transaction costs.

In 1999, the region’s ATM network was interconnected through the GCC ATM service. Wider acceptability, cost benefits and convenience of use are expected to boost debit card transactions. Demand for premium cards is high due to Kuwait’s growing high-income population. Consumers are now more sophisticated, and cards are an essential part of their lifestyles.

Consumer demand for high-quality services and rewards is also rising, and banks offer exclusive benefits and rewards to serve the most profitable consumers. Warba Bank introduced exclusive offers for premium credit cardholders in July 2015, offering benefits such as discounts on bookings at around 100 five-star hotels worldwide, free overnight stays, and discounts at over 35 restaurants in Kuwait.