Kuwait City has directed all health institutes, beauty salons, sports clubs and a swathe of other service providers to stop accepting cash and switch to electronic payments only, part of a broader drive to tighten financial oversight and digitalise the economy. The Health Ministry’s instruction requires fees for services across facilities under its supervision to be collected exclusively through approved banking channels and electronic payment systems, a shift that affects establishments from nurseries and training institutes to pest control firms operating under public health regulations. The order, conveyed in an official letter from Health Minister Dr Ahmed Al-Awadhi to senior ministry officials, emphasised that the move will ensure financial transactions are fully documented, reduce the risks associated with cash handling, and improve monitoring of financial flows across the regulated sectors. Compliance will be monitored, with measures to be taken against establishments that fail to meet the new requirements.
This decision aligns with Kuwait’s broader economic strategy to accelerate digital transformation and enhance governance frameworks. It follows regulatory developments in the digital commerce space, including a draft digital commerce decree-law that requires sellers to offer electronic payment options consistent with standards set by the Central Bank of Kuwait and restricts the use of unlicensed payment services.
Wider regulatory context
The Central Bank of Kuwait updated its instructions for electronic payment of funds in May 2023 to strengthen oversight of digital payment transactions and to provide a governance framework for both established and emerging service providers. The regulations cover risk management, anti-money-laundering controls and consumer protections, and empower the central bank to issue binding instructions to financial institutions and payment service operators.
The sectoral scope of Kuwait’s non-cash push has expanded over time. A notable backdrop is the rise in digital and card transactions in the country’s economy, where point-of-sale and online payments have shown significant growth in the last few years, signalling increasing consumer and business adoption of electronic payment technologies that reduce dependence on cash.
Finance and business groups have welcomed the focus on digital payments as supporting efficiency and transparency, though some smaller operators have expressed concerns about the cost and technical demands of upgrading point-of-sale systems. The requirement to route all payments through licensed systems may pose operational challenges for micro-enterprises that previously relied on cash due to lower overheads and less formal accounting systems.
Operational impact on service providers
Salons and health institutes, which are numerous and varied across Kuwait, face the most immediate impacts of the new policy. The Ministry’s letter included men’s and women’s salons for all age groups, private nurseries, sports clubs and various service companies within its regulatory ambit. These businesses will need to adjust their billing systems and customer interfaces to comply with electronic payment standards, including debit and credit card acceptance, mobile payment integration or other approved electronic channels.
For sports clubs and gyms, which also fall under the mandate, the policy adds a layer of financial transparency to membership fees and service charges. Clubs and associations that previously held cash-based collections at reception desks or events must now transition to electronic systems that can generate auditable transaction records.
Enhancing transparency and enforcement
Ministry officials have highlighted that the directive aims to combat under-reporting of revenue and streamline fee collection processes. By requiring digital payment acceptance, regulators seek to close gaps in oversight and ensure that all service providers operate within standardised financial reporting frameworks. Enforcement authorities are expected to conduct inspections and audits to assess compliance, with regulatory and administrative penalties looming for persistent violators.
The directive is seen as part of a package of measures to strengthen governance in line with Kuwait’s national digital strategy, which prioritises e-government services, financial sector innovation and an improved business environment.
Challenges and industry response
While large healthcare facilities and well-established businesses are generally well positioned to implement electronic payment systems, smaller entities may face cost and technical barriers. Point-of-sale infrastructure, integration with banking services and staff training on digital payment processing represent upfront investments that could strain modest budgets, particularly for independent salons and niche service providers.
Industry groups and chambers of commerce have underscored the need for supportive measures, including guidance on selecting compliant payment solutions and potential government incentives to offset transition costs. They have also called for phased implementation timelines to give smaller operators adequate preparation time.
Regulatory authorities have indicated they will engage with sector stakeholders to facilitate a smoother shift to electronic payments and to clarify compliance expectations. This engagement is expected to include outreach campaigns and technical assistance aimed at reducing friction during the transition period.
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Kuwait