The Bank of Israel has issued a framework providing international payment service providers access to regulated payment systems in Israel

Dear clients and colleagues,

We would like to inform you that on February 28, 2023, the Bank of Israel has issued a framework providing international payment service providers access to regulated payment systems in Israel (the Zahav (real-time gross settlement) system operated by the Bank of Israel; the “Payment Card Service” and “ATM Switch” systems, operated by SHVA; and the “Debits, Credit and Payment Transfers” and “Immediate payments (online)” systems, operated by Masav).

Effective immediately, this framework enables foreign payment service providers incorporated in a Recognized Country (the US, one of the EU countries or the UK) and holding a license from a regulatory authority in such country, to access such Israeli payment systems, relying on the foreign license, subject to certain conditions (included in the framework and relevant licensing Exemption Regulations).

The framework formulated by the Bank of Israel establishes two tracks for connection to the regulated payment systems: a test environment connection and a production environment connection.

Access to the regulated payment systems will effectively allow foreign payment service providers to offer their payment services in Israel, under the relevant conditions, at least until January 1, 2024 (the date in which the relevant exemption in the licensing Exemption Regulation will expire, unless extended).

We note that this publication is made following steps undertaken in recent years by the Bank of Israel, for the opening of access to the payment systems for other entities that are not banks or credit card companies. We further note that the draft Israeli Law for the Regulation of Payment Services, is currently undergoing legislation process and if enacted, it is expected to apply to foreign payment services providers operating under the framework.

To read the Bank of Israel publication in this regard >> click here

To read our recent client update regarding the relevant Exemption Regulations >> click here

Our office has vast expertise and experience in the fields of financial regulation and the payments market. We are closely involved in all aspects of the regulatory developments in this field and advise the leading international and Israeli entities in its context. We will be delighted to assist you in any issue relating to this field.

 
Banking & Finance Department
Herzog Fox & Neeman