The public consultation is the first stage in a process of setting up an advanced, efficient and reliable infrastructure in the payment system in Israel, which will be added to the existing payment and settlement systems and will serve for clearing immediate retail payments, like similar infrastructures existing in various countries worldwide.
Immediate payment is a new means of payment, in which the payment initiator is charged the sum of the payment immediately, and the payment receiver is credited with the amount immediately. This allows the payment receiver to make immediate use of the amount that is credited to the account, similar to payment with cash, and different than most of the common means of payment, in which the credit is not immediate.
The use of immediate means of payment provides a response to many needs existing in the Israeli payments market, as it allows the execution and receipt of immediate payments in a convenient and efficient manner, including payments at small amounts between private individuals or between private individuals and merchants, at full 24/7 availability and at very low transaction costs; the reduction of the shadow economy in Israel by decreasing the use of paper-based means of payment; increasing the liquidity and reducing the costs of credit to businesses, creating a platform for clearing existing and future advanced means of payment, including through various applications; enhancing the competition in the payment system by the entrance of new players who offer immediate payments throughout the transaction execution chain; and increasing the resiliency in Israel’s payment system by promoting an additional switch for transactions that will be carried out through advanced means of payment (that are not based on payment cards).
Ms. Irit Mendelson, Director of the Accounting, Payment and Settlement Systems, said “The Bank of Israel continues to act to promote innovation and efficiency in the payment system in Israel. Establishing an infrastructure for clearing immediate payments will provide a response to many needs existing in the Israeli payments market and will enable Israeli citizens to use means of payment that are advanced, faster, and convenient, similar to what is customary in other advanced economies. The Public Consultation document that we are publishing today is the first stage in the process of examining the establishment of such an infrastructure.”