Fintech & payments regulation in Israel (2026)

Legal framework

Regulation of Payment Services and Payment Initiation Services Law, 5783-2023 (in force 6 June 2024), administered by the Israel Securities Authority (ISA); Bank of Israel oversees payment and settlement systems (ZAHAV RTGS, instant payments via SHVA/MASAV) and Open Banking; Capital Market, Insurance and Savings Authority (CMISA) regulates Regulated Financial Services; Financial Information Services Law, 2021 governs open finance

Key points: digital payments & fintech in Israel

1. 01Dedicated payments licensing regime (ISA)

   The Regulation of Payment Services and Payment Initiation Services Law, 2023 came into effect on 6 June 2024, establishing a PSD2-style licensing regime at the Israel Securities Authority covering payment accounts, e-wallets, acquiring, remittances and payment initiation services for Israeli and foreign providers.

   lexology.com goldfarb.com

2. 02Licensing conditions and prudential requirements

   Licensees must meet fit-and-proper standards for shareholders and senior management, maintain minimum own funds, segregate client funds, meet data-security and business-continuity requirements, and comply with AML/CTF obligations; capital levels are set by ISA directives according to the service category.

   barlaw.co.il gornitzky.com

3. 03Transition from CMISA to ISA supervision

   Entities previously licensed by the Capital Market, Insurance and Savings Authority (CMISA) as payment service providers are being transferred to ISA supervision through 2025–2026; financial-asset service providers and credit providers with a payment-service component must hold dual CMISA + ISA licences.

   barlaw.co.il lexology.com

4. 04Open banking / open finance

   The Bank of Israel's Banking Supervision Department leads open banking under the 2017 Competition in Banking Law and the 2021 Financial Information Services Law; implementation uses Berlin Group NextGenPSD2 APIs (Open Banking IL Implementation Guidelines, latest v1.8 of January 2024), with Directive 368 setting API cyber-security requirements for payment initiation.

   boi.org.il kamakama.gov.il

5. 05Payment rails and instant payments

   The Bank of Israel operates ZAHAV, the shekel RTGS system, and supervises retail payment systems operated by SHVA (payment cards) and MASAV (bank transfers / faster payments that settle in roughly 5–7 seconds); the Bank is rolling out Request-to-Pay (R2P), ISO 20022 messaging and payment pre-validation as part of a multi-year modernisation strategy.

   boi.org.il boi.org.il boi.org.il

6. 06BNPL and consumer credit

   Israel has no bespoke BNPL statute; instalment-based consumer finance (including BNPL) is captured through the general credit/financial-services licensing regime supervised by CMISA (Regulated Financial Services) alongside consumer-credit protections, with the new ISA payments regime applying where a BNPL offering includes a payment-service component.

   gornitzky.com barlaw.co.il

Timeline of decisions

1. 18 Jan 2026Decision · official
   Bank of Israel expands payment-system identification code to three digits

   The central bank widened the participant identification code from two to three digits, lifting the prior 99-entity cap so more domestic and international fintechs can connect directly to Israel's payment systems. It signals continued opening of bank-only infrastructure to non-bank players.

   Bank of Israel

2. 23 Jul 2025Enforcement
   Capital Markets Authority grants first payment-institution licenses to Revolut, Rapyd, Airwallex and Mesh

   Israel's Capital Markets, Insurance and Savings Authority issued the first payment service provider licenses under the new regime to four international fintechs, allowing them to run digital wallets, process payments, do FX, hold customer funds and pay interest. It marked the practical launch of non-bank competition in Israeli payments.

   Calcalist (Ctech)

3. 6 Jun 2024Law
   Regulation of Payment and Payment Initiation Services Law enters into force

   The licensing chapter of the law took effect, requiring entities providing payment services or payment initiation to obtain a license, with supervision assigned to the Capital Markets, Insurance and Savings Authority. It created Israel's first dedicated authorization regime for payment institutions.

   Gornitzky GNY

4. 19 Nov 2023Guidance · official
   Bank of Israel announces steps to open payment systems to fintechs

   As part of a package of measures during the Swords of Iron war, the central bank set out timetables for new entities, fintechs, bigtechs and credit/savings unions, to connect to MASAV and SHVA, infrastructure previously reserved for banks. It cleared an operational path for non-banks to offer payment services.

   Bank of Israel

5. 6 Jun 2023Law
   Knesset enacts the Regulation of Payment and Payment Initiation Services Law

   Published as part of the 2023-2024 Arrangements Law and influenced by the EU's PSD2, the statute introduced licensing for acquiring, issuing payment instruments, account management and payment initiation. It established the core licensing architecture for Israeli fintech payments.

   Herzog Fox & Neeman

6. 28 Sept 2022Enforcement
   Securities Authority grants first open-banking (financial information service) licenses

   The Israel Securities Authority issued the first licenses to fintechs to provide financial information services under the Financial Information Service Law, letting them aggregate customer data alongside banks and credit card companies. It operationalized open banking for third-party providers.

   Gornitzky GNY

7. 1 Nov 2021Law
   Financial Information Service Law adopted

   The Knesset passed legislation regulating licensed access by third parties to customers' financial data, anchoring open banking in primary law. It defined who may provide account-information services and under what supervision.

   Lexology (Arnon, Tadmor-Levy)

8. 31 Mar 2021Guidance · official
   Open Banking Directive 368 first stage takes effect

   The Bank of Israel's Proper Conduct of Banking Business Directive 368, built on the NextGenPSD2 standard, obliged banks to expose account data via a common technical standard, initially within the banking system. It launched the regulatory infrastructure for data sharing.

   Bank of Israel

9. 14 Oct 2020Law
   Payment Services Law, 5779-2019 enters into force

   The consumer-facing payments statute took effect, governing the provider-customer relationship: liability for executing payment orders, cancellation rights, and unauthorized use, plus segregation of customer funds. It set the substantive rules later complemented by the 2023 licensing law.

   Pearl Cohen

10. 1 Jan 2019Law
    Knesset enacts the Payment Services Law, 5779-2019

    Israel's first comprehensive, PSD2-inspired payments statute was passed to modernize the legal framework for digital payments and strengthen consumer protection. It replaced the older debit-card-era rules and laid the foundation for the country's fintech payments regime.

    SSRN (Plato-Shinar)

11. 23 Jan 2017Law
    Strum Law on increasing banking competition enacted

    The Increasing Competition and Reducing Concentration in the Banking Market Law forced Bank Leumi and Bank Hapoalim to divest their credit card subsidiaries (Leumi Card/Max and Isracard) and removed barriers to new entrants. It reshaped the payment-card market and opened the door to fintech and new banks.

    Globes

Sources

1. 1.lexology.com/library/detail.aspx?g=6b16ed2b-10c1-4e0e-9308-2edbc507d13d
2. 2.goldfarb.com/client-update-new-financial-regulation-in-israel-the-regulation-of-pa
3. 3.gornitzky.com/new-regulation-in-israel-payment-services-and-payment-initiation-law/
4. 4.barlaw.co.il/practice_areas/banking-finance/banking-regulation/client_updates/isra
5. 5.barlaw.co.il/regulated-payment-services-and-financial-services-in-israel-summary-a
6. 6.lexology.com/library/detail.aspx?g=a6fede36-1240-468d-af55-1800c655bda8
7. 7.boi.org.il/media/fhwbfq1k/111529.pdf
8. 8.kamakama.gov.il/en/communication-and-publications/press-releases/the-banking-supervis
9. 9.boi.org.il/en/economic-roles/payment-systems/payment-systems-in-israel/zahav/
10. 10.boi.org.il/en/communication-and-publications/press-releases/the-bank-of-israel-i
11. 11.boi.org.il/en/communication-and-publications/press-releases/the-bank-of-israel-m
12. 12.gornitzky.com/navigating-the-israels-financial-services-license-regulation-landscap