Kuwait’s banks plan to impose fee on online transfers as usage soars

• Online financial transfers, especially through services like ‘Wamd,’ have surged in commercial payments, prompting some bankers to propose fees due to their growing volume and widespread use for both personal and business transactions.

With the increase in online financial transfers between local banks, a need has arisen to impose a fee on these transactions. The revenue generated is expected to help cover part of the ongoing costs of digital transformation at banks.

In this regard, informed sources told Al-Rai newspaper that a proposal is being considered to charge a fee for online transfers between banks, replacing the current policy of offering them free of charge. However, banks would still be entitled to charge KD 5 for transfers made through bank branches.

The sources pointed out that the proposal calls for keeping the transfer fee within branches unchanged, which applies to transfers from one account to another within the same bank. However, a fee would be applied to each “online” transfer, ranging from one to two dinars, with each bank determining its own rate within this range based on its strategy.

Proponents of this proposal believe that online financial transfers have significantly increased in commercial payment transactions between customers, creating a high volume for which banks currently collect no fees. Some bankers have suggested imposing a fee on transfers made via links or the “Wamd” service, as they handle a large portion of commercial payments, not just personal ones. These services benefit from a high daily transfer limit of 3,000 dinars, giving them substantial financial weight.

The sources also noted that personal financial transfers are typically of limited value, but electronic payments from one local bank account to another have expanded significantly, encouraging all customers to use electronic payments due to the ease and security of the process. Transfers are often completed quickly, with some funds available within seconds, and transactions can be made at any time.

It was reported that banks generally agreed on imposing a fee for online transfers between banks, but the decision to exclude “links” or “Wamd” transfers did not receive enough support to submit the proposal to the Central Bank. Concerns were raised that this measure could negatively affect small transactions, particularly those involving fast money transfers between customers.

The sources pointed out that, in light of the increase in banking spending on digitization, and the continued expectation of this trend, this path is seen as a sustainable process that affects all aspects of the bank. It involves redesigning internal operations to keep pace with the rapid daily changes in the financial technology sector. This justifies banks’ move to propose additional income to support their financing, aiming to improve the efficiency of online transfers and enhance protective barriers against breaches.

Despite a banking consensus on the fairness of applying a fee on online financial transfers between banks, discussions with the regulatory authorities so far indicate the Central Bank of Kuwait’s reservations about making any upward changes to banking fee regulations, particularly in the realm of technology payments. This is in line with the regulatory and banking strategy to promote financial inclusion and support digital transformation across all banking sector transactions.