Central Bank of Kuwait’s Overhaul of e-Payment Regulations

In keeping up with the rapidly evolving Fintech landscape, the Central Bank of Kuwait has recently overhauled its regulations in connection with electronic payment, settlement, and storage of funds, the operating of systems associated therewith, and Buy Now Pay Later services pursuant to Resolution No. 45/471/2023, which repeals the previous regulations under Resolution No. 44/430 of 2018.

Relevance

The applicability of these regulations is likely to extend to various businesses engaged in e-payment and Fintech services such as banks, e-payment and Fintech start-ups, e-wallet providers, online retailers, and e-commerce platforms. The scope of the regulations is yet to be tested, nevertheless, certain exclusions are made in respect of conventional banking and transactional activities.

What’s new?

Under the new regulations, CBK established various types of licensable activities which are broken down into e-payment, e-money, e-payment service operations, and Buy Now Pay Later services. Licensing requirements and operational restrictions depend upon the size of the service provider and the nature of activities it seeks to undertake.

In addition, for the first time, CBK introduced regulations governing Buy Now Pay Later services, which opens the door for Kuwait based businesses such as online retailers and e-commerce platforms to offer products on Buy Now Pay Later terms to Kuwaiti consumers.

Most notably, under the previous CBK regulations, entities qualified to be independently licensed as e-payment service providers were large shareholding companies licensed by the CBK to carry out lending or currency exchange activities. Small and medium enterprises were only offered licenses by way of acting as an agent of such large companies. CBK has now repealed this restriction. As such, start-ups currently have more flexibility than before to obtain the necessary licenses and operate independently.

Furthermore, under the new regulations, CBK strengthened the regulatory framework in relation to corporate governance, risk management, anti-money laundering and terrorist financing, cyber security, business continuity, consumer protection, and data privacy.

How can we help?

If you are an existing service provider or a business aiming to offer e-payment and other Fintech services in Kuwait, Al Tamimi & Company is here to support you with your licensing and compliance endeavors regarding the new CBK e-payment regulations. We can provide guidance on how these regulations apply to your specific business. If you need any assistance, please feel free to contact either Omar Handoush or Yousef Alshereedah.