Fintech & payments regulation in Israel (2026)

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.