Central Bank of Kuwait: The Development of CBK’s Payment Systems

Prior to the implementation of Kuwait’s Automated Settlement System for Inter-Participant Payments (KASSIP) and Kuwait Electronic Cheque Clearing System (KECCS) in 2015, CBK and local banks relied on cheques and paper confirmations (letters and Telex) to process payments. Later, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) System was adopted, serving as a global messaging system for financial transactions that connects banks around the world. During that period, clearing and settlement of interbank paper cheques offsetting were conducted manually by exchanging envelopes through CBK.

In 1960, Kuwait Currency Board was established pursuant to the Amiri Decree No. 41 of 1960 in preparation for the issuance of the Kuwaiti Dinar, which was put into circulation in April 1961.

The Currency Board laid the foundation of the Central Bank of Kuwait. As the Kuwaiti banking sector expanded throughout the 1960s in terms of the number of banks and the volume of their activities, CBK was established on June 30, 1968, pursuant to Law No. 32 of 1968 Concerning Currency, the Central Bank of Kuwait, and the Organization of Banking Business.

In 1979, the first Automated Teller Machine (ATM) was operated and the first plastic bank card was issued in the State of Kuwait. This milestone represented a significant achievement in the financial technology infrastructure, making banking services more accessible and convenient for customers.

In 1992, the Shared Electronic Banking Services Company (KNET) was established in partnership with local banks. The company offers a comprehensive range of banking payment services within a sophisticated network, adhering to the highest international security standards at the time.

In 1993, the SWIFT system was implemented in the State of Kuwait, facilitating secure transactions, money transfers, and interbank communication in a safe and effective manner.

In 1994, the Point of Sale (POS) system was introduced in the State of Kuwait, enabling customers to conduct electronic payments and transactions using credit or debit cards. This system marked a significant leap forward in modernizing and enhancing business transactions within the State of Kuwait.

In 1997, the Gulf Cooperation Council Network (GCC-Net) was launched, facilitating the interconnection of Automated Teller Machines (ATMs) across GCC countries. This system provides GCC citizens and other network participants with seamless access to this service’s benefits.

In 1998, the first online banking service was introduced, enabling customers to access their accounts, execute transactions, and manage their financial affairs through online platforms.

In 2004, the banking sector witnessed a significant qualitative leap with the introduction of KASSIP. Developed in alignment with the highest international standards for financial market infrastructure (BIS/PFMIs), KASSIP is underpinned by Realtime Gross Settlement system (RTGS). The system enables the immediate and final settlement of payments between participants through SWIFT, with the participation of Kuwaiti local banks and CBK as a participant and system operator. The regulatory guidelines and operational procedures for KASSIP were issued in 2004 and updated in 2010.

CBK participated in developing the treasury single account system for the Ministry of Finance to manage cash in public finances. In collaboration with the Ministry of Finance, the system was implemented in stages starting in 2009, to achieve a paradigm shift in cash liquidity management of the Ministry of Finance in order to finance expenditures and accelerate payment processes to ministries and government entities in accordance with the financial authorization granted by the Ministry of Finance to entities subject to the treasury single account system.

In 2010, the principles of chip card payment (EMV) were implemented across various payment channels. These were deployed through point-of-sale (POS) devices that accommodate chip payment cards and automated teller machines (ATMs), thereby enhancing the authentication and verification mechanisms for transactions conducted using direct debit and credit cards.

In 2010, the first mobile banking service was introduced.

In 2011, the IBAN (International Bank Account Number) system was implemented in the State of Kuwait. This system achieves international standardization for the structure of bank accounts, enabling banks’ technical systems to enhance both speed and accuracy in the execution of financial transfers.

In 2014, the Gulf POS service (GCCNET) was launched for ATM cards issued by banks operating in the GCC countries, between the State of Kuwait, the Kingdom of Bahrain, and the State of Qatar. The service provides a POS network and ATMs without intermediaries, ensuring the speed and accuracy of transactions between banks operating under the technical and legal provisions, rules, and controls approved by the monetary institutions and central banks of the GCC countries.

In 2015, CBK launched the Kuwait Electronic Cheque Clearing System (KECCS), which is a system for clearing KWD written cheques electronically by converting the original cheque to the electronic format for the electronic clearing process to collect the value of the cheque for the beneficiary’s account and deposit it in the customer’s account within the same day instead of the previous manual clearing system which took three days. The system was implemented in accordance with international practices that conform sound and secure standards. CBK also carries out, directly, debit and credit transactions on accounts of participants of the (KASSIP) system, according to net settlement position. Furthermore, regulatory guidelines and operational procedures for KECCS were also issued in 2015.

In 2017, Near Field Communication (NFC) technology was implemented in the State of Kuwait, allowing POS to accept contactless payments using cards that support this technology.

In 2018, CBK’s Board of Directors issued instructions regulating e-payment of funds directed towards providers of e-payment and settlement services and their agents. CBK was keen to provide supervisory and regulatory frameworks to benefit from the advantages provided by these instructions within the framework of Law No. 20 of 2014 regarding electronic transactions, which gave CBK the authority of oversight and regulation of the electronic payments’ activities in the State of Kuwait.

In 2018, the regulatory sandbox framework was issued to support and regulate innovative initiatives in the field of financial technologies in a way that serves the Kuwaiti economy interest. New organizational units have been created at CBK for financial technologies and supervision of e-payments systems and technological means used in providing banking services and e payment and settlement systems.

In 2019, the Kuwait Electronic Banking Services System (KEBSS) was launched. This system seeks to improve the banking services provided to ministries and government entities by implementing cash transfers for government entities in KWD automatically and in real time, in a way that increases efficiency, reduces operational expenses, and saves time and effort for all users of payment systems. The rules and regulations and operational procedures for the Kuwait Electronic Banking Services System were also issued.

In 2020, the cybersecurity’s strategic framework for the banking sector in the State of Kuwait was completed, as it enhances the protection and information security measures for the banking sector in light of the rapid technical development and continuous endeavor to benefit from the advantages of technology in the banking and financial sector.

In 2020, CBK announced linking POS devices in both the State of Kuwait and Saudi Arabia through GCC-NET, allowing bank customers to pay for their purchases in the two countries directly through GCC-NET. It’s worth noting that the POS service had been linked previously with the Kingdom of Bahrain, the Sultanate of Oman, and the State of Qatar in 2014.

In 2021, CBK launched the newly updated KASSIP changing the system’s working hours, as the participating banks are connected through CBK-Net, which is a large-scale secure network owned by CBK allowing the exchange of payment messages in accordance with the international standard (ISO20022), and encrypted with the latest security technologies and soundness standards. It also comes with doubled efficiency in terms of number of transactions and speed of transaction execution. CBK is keen on following the Principles for Financial Market Infrastructures (PFMIs) issued by the Bank for International Settlements (BIS).

In 2022, CBK announced the start of implementing the GCC Cross-border Payment System (AFAQ) in the State of Kuwait by providing a real-time settlement system between GCC central banks, supporting dealing in the local GCC currencies, facilitating clearing and financial settlements and ensuring prompt processing of financial transfers.

In that same year (2022), CBK enabled government entities to use KEBSS for the foreign currency to conduct cash transfers and receive a response automatically without referring to CBK. Regulatory guidelines for the Kuwait Electronic Banking Services System and operational procedures were also issued.

In 2023, within the framework of continuous pursuit and development, and within CBK’s vision in developing the payment systems, CBK extended the working hours of KASSIP and KECCS by an additional hour at the end of each working day (in May 2023). In the same year (September 2023), CBK extended a second additional extension of the operating hours. In (December 2023) CBK extended a third additional extension of the operating hours of the systems with the aim of developing banking services in the country.

In 2023, CBK extended the working hours of the KECCS by two additional hours, so that the cheque submission session remains until 2:30 p.m. and the cheque reply session remains until 3:30 p.m., with the aim of raising the efficiency of the national economy.

In 2023, the instructions regulating the electronic payment of funds issued in 2018 were updated to provide for requirements that must be met by existing and emerging financial institutions willing to practice e-payment or e-money activity, or operate e-payment systems according to five types of licenses commensurate with the size and nature of the activity. The new instructions also included the supervisory controls the said institutions must adhere to in practicing the activity in the areas of corporate governance, the framework of risk management, Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT), cybersecurity, business continuity, and customer protection, in order to enhance the soundness and stability of the payment systems in the State of Kuwait. The new instructions shall pave the way for providing Buy Now Pay Later (BNPL) postpaid services within a supervisory and regulatory framework that defines the necessary measures to protect customers’ rights.

CBK initiated development of the Kuwait National Payments System (KNPS) in its second version, to include projects that will contribute significantly to the development of payment system services in the State of Kuwait in accordance with the highest international standards.

In 2023, the Kuwait Clearing Company (Maqasa) joined the KASSIP system, becoming the first financial institution to participate in the KASSIP framework.

In 2024, the "Wamd" instant payment service was launched by KNET in partnership with Kuwaiti banks as a new e-payment service tailored for individual customers in the State of Kuwait. Developed in accordance with the CBK directives, this service facilitates instant financial transfers via banks’ electronic applications around the clock. This service is part of CBK’s unwavering commitment to adopting the latest technologies and developing payment services and systems in the State of Kuwait. Such service highlights the importance of enhancing efficiency and flexibility in financial transactions to meet the evolving needs of the public and to support the State of Kuwait’s vision for an advanced digital future.

In the same year (2024), the KASSIP operating hours were extended by an additional two hours, bringing the system’s operating hours to be from 7:00 a.m. to 7:15 p.m. This extension contributed to improving the work quality, and better accommodating the needs of beneficiaries, namely bank customers, by transferring funds for an additional two hours.

In 2025, the KASSIP operating hours were further extended to 11:15 p.m. on regular business days, as well as during weekends and official holidays. Additionally, the operating hours of the Kuwait Electronic Banking Services System were also extended to 10:30 p.m.

In 2025, CBK also extended the KECCS operating hours by an additional four and a half hours, extending the cheque submission session to 7:00 p.m. and the cheque response session to 8:00 p.m., effectively serving all sectors of the national economy.

In the same year (2025), the use of purpose code of payments was activated in the State of Kuwait on April 10, 2025, to be utilized in financial transactions within national payment systems. The purpose codes are developed to enhance the efficiency of financial transfer operations in payment systems. They contribute to a more simplified payment process by unifying the purpose codes for financial transfers.

In the same year (2025), the KASSIP regulatory rules and operational procedures document was updated to reflect the updates to the KASSIP system.