Bank of Israel Governor Prof. Amir
Yaron: “In recent years, the Bank of Israel has taken a series of steps to
advance innovation, efficiency, and competition in the payments market to
benefit the Israeli public. The Bank of
Israel is closely monitoring all of the developments in the Israeli payments
market in general, and in the payment wallets market in particular. We will continue to act in order to make sure
that the balance is maintained that will allow opportunities for the various participants
to develop the market as innovative, advanced, efficient, and competitive,
thereby adapting the world of payments in Israel to the cutting edge of
technological innovation for the customer’s benefit.”
Background on the payments market
and the Bank of Israel’s position
The advanced payments market has
undergone significant changes recently in general, and in the digital wallets
field in particular. These developments
include the offering of innovative payment services by existing and new participants. Among these, Bank Hapoalim has announced its
intention to launch a digital wallet on the infrastructure of the Bit payment
application; Bank Discount has announced its intention to launch a digital
wallet, subject to the necessary approvals, in conjunction with Shufersal on
the Paybox application infrastructure; Bank Leumi, Max, Isracard, and CAL have
launched digital wallets for their customers; various retailers are also acting
to provide their customers with additional advanced payment options; and global
technology companies are expected to launch digital wallets for the Israeli
public. These initiatives have been
made possible thanks partly to a process led by the Bank of Israel, together
with all the participants in the market, to implement the EMV standard at
merchant terminals in the past year, which enables NFC (contactless) payments
and payments through digital wallets, among other things.
The Bank of Israel’s policy regarding
developments in the payments market is intended to create the infrastructure
that will enable market participants to develop innovations in the payments
field and to thereby expand the variety of options available to consumers and
merchants in Israel to make payments in a way that will empower the customer’s
experience, improve consumer well-being, and at the same time contribute to the
encouragement and development of competition to benefit the public. This position includes a long-term view of
the market and the development of means of payment in it.
The Bank of Israel has recently
examined new initiatives in the payments market, including existing activity in
the field of digital wallets and activity that is expected to develop in the
near future. The examination included a
review of what is being done abroad, in-depth queries and assessments of the
development and characteristics of the digital wallet market structure in
Israel, and meetings and discussions with various interested parties, both
public agencies and relevant business entities.
One of the significant issues regarding
the development of the payments market, and by extension developments in the
financial market, has to do with the transfer and accumulation of information
by entities in the payment transaction chain due to the customer’s financial activity,
and the uses made of such information.
This is a complex issue, the limits of which are beyond the financial
uses and their effects. The Bank of
Israel plans to examine this issue together with the other relevant bodies, and
if necessary, to advance regulation on the matter.
In view of the examination that was
made, and based on the stated policy, the Bank of Israel formulated a position
according to which such initiatives can encourage competition, develop the
world of payments, and bring value to the Israeli customer, and as such, should
not be delayed, provided that at this stage of developments in the payments
market:
1. The information gathered within the digital wallets shall not
be used to provide financial services or sell other financial products to
customers with payment cards that were issued for them by issuers that are not
the providers of the wallet—until all aspects of this issue have been examined;
2. Open wallets shall, within a short time, be able to hold
multiple cards from various issuers, so that customers will be able to use a
number of cards at their choice easily and conveniently;
3. The restriction imposed on the two largest banks in the
Increasing Competition and Reducing Concentration in the Banking System Law
regarding facilities on credit cards applies to credit cards issued or that
will be issued as part of cooperative ventures in which the two largest banks
are involved, whether through cards designated for use in digital wallets or
through other cards, unless the Bank of Israel announces, at the end of the
examination, that such cooperative ventures are not defined as a joint issuance
over which the restriction applies.
The Bank of Israel will continue to
monitor developments in this area together with its activity to lead and
advance innovation and efficiency in the area of advanced payments, and if
necessary it will work toward the appropriate regulation.