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The card payment market in Kuwait has been growing over the past five years, driven by the steady increase in the number of cards per capita and point-of-sale (POS) footprint, and significant growth in the penetration of digital payments.

In addition to the banks, startups in the payment service provider (PSP) segment have played a key role in driving the adoption of digital payments in the market, with easy-to-adopt solutions for merchants.

Understanding the Payment landscape in Kuwait

The COVID-19 outbreak has given a further boost to card payments, by accelerating the adoption of e-commerce and digital payments. Consumers are compelled to carry out online transactions across sectors for their day-to-day needs during the lockdowns imposed by the government to control the spread of COVID-19. Legacy offline businesses and SMEs are digitalizing their sales on a war footing to reach their consumers.

As a result, the digital payment landscape is expected to witness increased adoption of contact payments, greater digitalization of banking services, higher focus on fraud prevention systems and infrastructure, evolution of fintech and payments-related regulations, rise of digital currencies and an impetus for banks – fintech partnerships. These shifts will have implications for both banks and PSPs.

During the last few weeks, KPMG has analyzed the implications of these market shifts on banks and PSPs in Kuwait. We have held structured discussions with several market incumbents to understand their perspectives and experiences. In this report, we outline the synthesis of this research, along with a range of key considerations for both PSPs and banks to address this market opportunity. 

POS accounts for 78% of card payments in Kuwait; over the last five years, digital payments (payment gateways) have grown grew ~9X faster in value than POS, albeit from a lower base

Ankul Aggarwal - Partner Deal Advisory

Ankul Aggarwal

Partner - Deal Advisory

Ankul has over 20 years of experience in both Corporate Finance and Corporate Planning. Prior to joining KPMG, he as he worked with one of the leading banks in Kuwait and one of the largest business houses in the Middle East.

Harsha Prakash, Associate director KPMG in Kuwait

Harsha Prakash

Associate Director- Deal Advisory

Harsha advised clients across a diverse range of sectors on feasibility studies, business plans, market assessments and growth strategy mandates. He specializes in advisory for emerging sectors such as start-ups, e-commerce, fintech and new age technologies.

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Impact of COVID-19 on payments

COVID-19 has had a considerable impact on consumer behavior, leading to a sharp growth in the adoption of e-commerce and digital payment methods

  • The shift witnessed in consumer behavior towards online transactions varies across sectors, based on:
    • The need for products/services
    • Availability of reliable service providers
    • Ease of adoption
  • The extent of the positive impact on digital payments is expected to be marginally lower than the growth in e-commerce, due to the prevalence of cash on delivery (CoD).
  • *While shifts have been observed in consumer behavior in the aftermath of COVID-19-related restrictions, the overall sustainability of the change in consumer behavior towards online transactions and payments will need to be assessed post COVID-19.