Payments Landscape in Kuwait: Opportunities and Risks to 2023

Payments Landscape in Kuwait: Opportunities and Risks to 2023

Summary
Payment card adoption is on the rise in Kuwait in line with rising awareness of electronic payments and an increase in the country’s banked population, which now stands at 82.7% of the country’s adult population. Debit card penetration stands at nearly one card per individual, mainly driven by payroll cards. Improvements in payment infrastructure and the adoption of new technology such as EMV have also supported the payment card market during the review period (2015-19).

Debit cards account for 92.1% of overall payment card transaction value in 2019. Salary accounts remain a key driver of debit card uptake and usage, with several banks offering consumers gifts and cash rewards for opening a salary account. Meanwhile, instant card issuance is a growing trend, with banks such as Al Ahli Bank of Kuwait offering consumers debit cards instantly when opening an account.

The adoption of credit and charge cards remains low in Kuwait for religious reasons, as Islam forbids interest. Credit and charge cards account for 18.6% of cards in circulation and 7.9% of payment card transaction value in 2019. To encourage adoption, leading banks including Commercial Bank of Kuwait, Kuwait International Bank, and Ahli United Bank now offer Sharia-compliant credit cards. Banks also use benefits, promotional offers, and loyalty programs to encourage usage, which will aid credit and charge card market growth going forward.

The e-commerce market registered a review-period compound annual growth rate (CAGR) of 16.2% to reach KWD566.9m ($1.87bn) in 2019. Rising online and mobile penetration, increasing consumer confidence, and online shopping events have helped drive this trend. To benefit from the growing market, banks such as Kuwait Finance House (KFH) and Gulf Bank offer exclusive cards for online shoppers. Growth is also likely to be supported by the emergence of online payment solutions including PayPal, Masterpass, and Visa Checkout.

The report 'Payments Landscape in Kuwait: Opportunities and Risks to 2023', provides detailed analysis of market trends in the Kuwaiti cards and payments industry. It provides values and volumes for a number of key performance indicators in the industry, including cards and cheques during the review-period (2015-19). The report also analyzes various payment card markets operating in the industry, and provides detailed information on the number of cards in circulation, transaction values and volumes during the review-period and over the forecast-period (2019-23). It also offers information on the country's competitive landscape, including the market shares of issuers and schemes.

The report brings together research, modeling, and analysis expertise to allow banks and card issuers to identify segment dynamics and competitive advantages. The report also covers details of regulatory policy and recent changes in the regulatory structure.

The report provides:

• Current and forecast values for each market in the Kuwaiti cards and payments industry, including debit, credit, and charge cards
• Detailed insights into payment instruments including cards and cheques. It also, includes an overview of the country's key alternative payment instruments
• E-commerce market analysis
• Analysis of various market drivers and regulations governing the Kuwaiti cards and payments industry
• Detailed analysis of strategies adopted by banks and other institutions to market debit, credit, and charge cards

Companies Mentioned:
Kuwait Finance House, National Bank of Kuwait, Commercial Bank of Kuwait, Gulf Bank, Ahli United Bank, Boubyan Bank, Visa, Mastercard, American Express, Diners Club.

Scope

• Metal cards, which are popular in countries like the US, are now being introduced in Kuwait to cater to high net worth and ultra- high net worth individuals. In March 2019, KFH partnered with French payment solutions provider IDEMIA to launch the country’s first metal card, the Visa Infinite Charge Card. Card holders are entitled to benefits including worldwide VIP airport lounge access, a concierge service, comprehensive travel insurance cover, and emergency medical assistance.
• To facilitate the adoption of electronic banking, Kuwait’s financial institutions are gradually expanding the necessary infrastructure. National Bank of Kuwait (NBK) collaborated with ACI Worldwide to launch SWIFT Global Payments Innovation (gpi) services for its customers in January 2019. SWIFT gpi now includes nearly 300 banks, and allows members to provide same-day fund transfers.
• To increase transparency and boost consumer confidence in electronic payments, in September 2018 the Central Bank of Kuwait introduced a new regulation mandating that all service providers must register in its electronic payment system. The central bank has given providers one year to standardize e-payment transactions in accordance with the central bank’s approved standards. All e-payment methods are subject to the scrutiny of the central bank. While banks are automatically listed as service providers, other institutions will have to apply separately. The aim is to bring all electronic payment methods under the regulation of the central bank.

Reasons to buy

• Make strategic business decisions, using top-level historic and forecast market data, related to the Kuwaiti cards and payments industry and each market within it.
• Understand the key market trends and growth opportunities in the Kuwaiti cards and payments industry.
• Assess the competitive dynamics in the Kuwaiti cards and payments industry.
• Gain insights into marketing strategies used for various card types in Kuwait.
• Gain insights into key regulations governing the Kuwaiti cards and payments industry.