Kuwait bids farewell to 'cash': 85% of payments are now non-cash

Since the launch of the first automated teller machine and the use of plastic cards in Kuwait in 1979, the digital transformation journey in the banking sector has been led by the Central Bank of Kuwait through a proactive approach based on developing supportive regulatory frameworks for financial innovation and enhancing the adoption of modern technologies, including digital banking, cloud computing, and artificial intelligence technologies, while simultaneously strengthening cybersecurity, data protection, and maintaining financial stability.

Against the backdrop of rapid digital transformations witnessed globally in recent decades due to the Fourth Industrial Revolution and tremendous developments in communications and information technology, as well as the role played by the coronavirus pandemic in accelerating the pace of digital transformation—having proven that countries most digitally prepared were best able to mitigate the economic repercussions of the pandemic—Kuwait was not distant from these developments. Its development vision, "Kuwait 2035," aimed at enhancing its status as an advanced financial and commercial hub, included fundamental pillars for transitioning from a resource-based economy to a knowledge-based economy to achieve sustainable growth. The vision also prioritized the development of information and communications technology infrastructure.

In this context, the Central Bank of Kuwait played a pivotal role in leading the digital transformation of the banking sector through a series of regulatory steps and measures, the most prominent of which was the launch of the Regulatory Sandbox. This is one of the leading regulatory environments globally, targeting companies and individuals wishing to offer innovative products and services in the field of modern financial technologies, whether related to electronic payment operations or other innovative financial services and products. This environment aims to support and enable innovative initiatives that serve the national economy by providing innovative financial service providers with the opportunity to test their products and services using the latest technologies or through innovative applications of existing technology.

Since 2004, the Central Bank of Kuwait has continued to develop and operate the payment systems infrastructure in the State of Kuwait, including the Kuwait Automated Settlement System for Participants (KASSIP) and the Kuwait Electronic Cheque Clearing System (KECC). These systems have witnessed continuous expansions and updates that contributed to raising their operational efficiency and enhancing their reliability, culminating in making them available for operation around the clock, including holidays, starting from April 1, 2025.

The Bank also implemented the second phase of the Kuwait National Payments System project, which began development in January 2024. In this framework, the Kuwait Automated Clearing House (KACH) was launched in January 2026 as a strategic step in developing the payment systems infrastructure. Additionally, the Kuwait Dispute Management System (KDMS) was launched last February as part of the second phase of the Kuwait National Payments System project. It provides a comprehensive mechanism for handling and resolving disputes related to financial transactions executed through national payment systems, in addition to supporting the digital transformation of related financial correspondence.

The Central Bank of Kuwait also launched the Electronic Banking Services System (EBSS), which serves government entities and provides speed, accuracy, and efficiency in completing financial transactions. The number of government entities participating in the system reached 51, enabling them to execute financial transfers and receive responses automatically and instantly, in addition to monitoring transfers and account balances directly without the need to visit the Central Bank.

In the field of cross-border payments, all local banks joined the Gulf Payments "Afaq" system, which aims to execute financial transfers in Gulf Cooperation Council currencies within short timeframes and at low costs within a secure and stable environment.

With its commitment to providing an environment that stimulates modern financial technologies, the Central Bank approved the launch of the instant payment service for individuals in 2024. The Kuwaiti market also witnessed the launch of Apple Pay in 2022, becoming one of the most prominent global digital payment services available in the local market, alongside previous approvals granted years ago for similar digital payment services, including Samsung Pay. This development contributed to increasing the share of non-cash transaction values from approximately 34% in 2010 to 85% during the second quarter of 2026.

In regulating the electronic payment ecosystem, the Central Bank of Kuwait mandated companies and financial institutions operating in the field of electronic payment and settlement systems to regularize their status and obtain its approval in coordination with the Ministry of Commerce and Industry, which grants licenses. The Central Bank also required entities established after the issuance of regulatory instructions to register in the registry of activity practitioners and their agents at the Bank before providing any services or products related to electronic payments. Nine companies were approved to engage in electronic payment services activities, and seven companies as providers of electronic money services.

Regarding digital banks, the Central Bank established the digital banking framework in 2022, which allows for the establishment of digital banks according to three main models. The first model involves creating a digital banking unit within an existing bank but under a different brand name; this model is already applied in the local market through "Weyay" belonging to National Bank of Kuwait, "Tam" belonging to Kuwait Finance House, and the "SiDi" application belonging to Boubyan Bank. The second model consists of banking-as-a-service based on partnerships between licensed banks and digital partners. The third model relies on creating a fully independent digital bank operating under a banking license and providing integrated digital services that rely heavily on cloud systems.

The Central Bank of Kuwait consistently emphasizes that innovation in the financial sector requires a reliable environment subject to effective supervision. From this perspective, the Innovation Hub was launched in 2023 to encourage innovation in the fields of artificial intelligence, digital transformation, information security, financial technologies, and regulatory technology, in addition to supporting the conversion of ideas into practical solutions by providing resources and enhancing the culture of experimentation.

The Central Bank of Kuwait’s digital strategy is based on the vision that digital transformation is no longer merely the adoption of modern technology, but an integrated process based on innovation, flexibility, and the ability to keep pace with rapid changes, thereby establishing an advanced operational and technical structure that meets customer needs and supports the stability and sustainability of the financial sector. The Bank’s role in supporting modern financial technologies (FinTech) is also highlighted through regulatory instructions, frameworks, and procedures necessary to provide a safe and stimulating environment for innovation that allows for the testing of innovative products and services and verifying their efficiency according to global best practices, while maintaining the safety and stability of the financial system.

The Bank’s vision for digital transformation is based on partnership and integration with local banks. It issued a circular urging them to prepare a strategy for shaping the future, including their vision and objectives in developing banking products and services using high-quality, secure, and cost-appropriate modern financial technologies.

In the area of developing national cadres, the Bank launched an internal scholarship program for Kuwaitis on April 30, 2026, to obtain a master’s degree in financial technology, aiming to prepare national cadres capable of leading the digital transformation in the financial sector.

Financial inclusion is one of the most prominent pillars of the Central Bank of Kuwait’s digital strategy. It continues to formulate policies and strategies that facilitate access for individuals and small and medium-sized enterprises to financial services. The State of Kuwait has recorded tangible progress in financial inclusion indicators, particularly in the number of bank accounts for low-income categories and domestic workers, which exceeded 1.47 million accounts as of June 30, 2026.

The Central Bank emphasizes that enhancing cybersecurity and managing digital risks represent one of the most important pillars of its digital strategy, based on an approach that balances accelerating financial and technological innovation with maintaining financial stability and protecting banking infrastructure. Among the most prominent initiatives in this field is the issuance of the Cyber and Operational Resilience Framework for local banks and financial institutions in December 2025, as an update to the cybersecurity framework issued in 2020, aimed at keeping pace with the evolution of digital risks and enhancing the banking sector’s ability to counter cyber threats.

The Central Bank of Kuwait also launched the "Fraud Shield" initiatives acceleration program in April 2025. This is a strategic initiative to enhance the detection and prevention of electronic financial fraud and increase public awareness, involving participation from banks, payment service providers, financial technology innovators, and regulatory authorities.

In the framework of building national capacities, the Bank designed the Risk Management Leaders and Cybersecurity Leaders programs under the "Kafa'a" initiative, in collaboration with local banks and the Banking Institute, to qualify specialized national cadres and equip them with the necessary knowledge and skills to keep pace with labor market requirements.

With the accelerating pace of digital transformation in the financial sector, the Central Bank recognizes that building and maintaining consumer trust is a fundamental element to ensure a safe, inclusive, and resilient financial system. From this perspective, it adopted an integrated approach focusing on enhancing consumer protection, supporting digital innovation, and raising financial literacy levels, alongside launching awareness and educational campaigns, the most prominent of which is the "Be Aware" campaign to protect customers from emerging digital risks and threats.