Middle East · GDP rank #28
IL · ILS @ 0.3460/USD
Israel runs a card-mature, bank-dominated retail payments market with one wholesale rail (ZAHAV, the BOI-operated RTGS, fully on ISO 20022 since November 2025) and one retail-instant rail (MASAV Faster Payments) underneath the consumer-facing Bit (Bank Hapoalim) and Pay (Bank Leumi) wallets. Bit alone holds roughly half of P2P value across ~3.3m active users. The Capital Markets Authority issued the country's first shekel-pegged stablecoin authorisation in 2024 and the Bank of Israel's digital-shekel design work hands a launch recommendation to the Governor at end-2026.
Tab 04
The macro backdrop that actually bends payment behaviour. Nominal GDP, real growth, CPI, policy rate, and FX volatility set the backdrop; interchange, MDR, FX regime, and capital-control posture set the industry-specific dynamics.
Nominal GDP
USD · 2024
Population
people · 2025
Adults with a bank account
% · 2021
Smartphone penetration
% of adults · 2024
Interchange caps
Interchange is the per-transaction fee an acquirer pays an issuer — the floor underneath every MDR merchants see. Domestic caps (where they exist) shape the market far more than individual network schedules.
Regulator · Bank of Israel
BOI capped domestic interchange via Banking Supervision rules; cross-border cards revert to scheme defaults.
Credit interchange (domestic)
% of transaction value · BOI cap 2022
Debit interchange (domestic)
% of transaction value · BOI cap 2022
Merchant discount rate
The MDR is the fully-loaded cost of card acceptance to the merchant — interchange, scheme fees, and acquirer margin. Small-merchant pricing is routinely 2-3x the large-merchant average.
1.0–1.8% for blended-pricing SMBs; ISV stacks (Stripe, Tranzila, CardCom) sit at the lower end
Avg. credit MDR (large merchant)
% · 2024
Avg. debit MDR
% · 2024
Active regulation
Effective · 2024-08-01
Capital Market, Insurance and Savings Authority framework for crypto-asset financial services providers; basis for Bits of Gold (BILS) stablecoin authorisation and subsequent licensing track.
Source · Capital Markets, Insurance and Savings Authority
Effective · 2024-10-15
Major October 2024 amendment broadened consent requirements, breach-notification timelines and PPA enforcement powers to align with GDPR principles.
Source · Privacy Protection Authority (PPA)
Effective · 2019-01-01
Caps consumer cash transactions at ILS 11,000 (business-to-business) and ILS 50,000 (between private individuals); enforced by Israel Tax Authority.
Source · Israel Tax Authority
Effective · 2019-01-01
Unwound structural ownership ties between the largest banks (Hapoalim, Leumi) and the credit-card companies (Isracard, CAL, Max); the structural pre-condition for the 2025–26 wave of stand-alone card-issuer product differentiation.
Source · Bank of Israel
Effective · 2020-10-14
Israeli PSD2 transposition; covers PIS/AIS APIs, e-money issuance, payment-initiation services and customer rights. Basis for the open-banking participant licensing.
Source · Bank of Israel
Effective · 2024-04-01
Extends AML/CFT obligations to crypto-asset service providers under the CMA's broader supervisory remit; aligns with FATF travel-rule requirements.
Source · Israel Money Laundering and Terror Financing Prohibition Authority (IMPA)