Kuwait: Cash withdrawals still a trend despite digital payment push

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Despite the surge in digital payments and the government’s efforts to promote electronic transactions, cash withdrawals remain significant in Kuwait, raising questions about the reasons behind this trend. While online and point-of-sale payments have increased, ATM withdrawals still constitute a substantial portion of total transactions, reports Al-Rai daily. During 2023, financial payment withdrawals reached approximately 45.795 billion dinars, marking an 8.5% growth compared to 2022. Despite a slight decrease in ATM withdrawals, they accounted for about 23.5% of total transactions, totaling 10.722 billion dinars.

Point-of-sale transactions reached 17.519 billion dinars, while website payments saw a significant jump to 17.553 billion dinars. Government efforts to reduce cash transactions, such as halting cash payments for real estate transactions and pharmacy purchases over 10 dinars, aim to curb money laundering. However, factors like rising household spending due to inflation and a significant portion of the workforce without bank accounts contribute to the persistence of cash transactions.

Additionally, the black market plays a significant role in cash withdrawals, particularly in money transfers and illicit activities like drug trafficking. Despite regulatory measures to combat money laundering, some individuals prefer cash transactions to avoid scrutiny. While Kuwait excels in financial digitization compared to other Gulf countries, reducing cash transactions remains challenging. Globally, digital payments are expected to reach $11.95 trillion by 2025, indicating a global shift away from cash. While countries like Sweden have successfully reduced cash usage, Kuwait continues to grapple with the persistence of cash transactions, highlighting the need for further efforts to promote electronic payments.