The Bank of Israel is taking measures to expand the distribution and use of debit cards. This is expected to lead to increased competition in the area of payment cards; a reduction in the use of cash; making electronic means of payment more accessible to the general public; an expansion of the variety of payment solutions for households and businesses; potential cost savings for businesses (cash handling costs, financing costs and settlement fees); and cost savings for households (card fees, cash withdrawal fees, and cash holding costs). The measures for increasing the use of debit transactions (transactions on debit cards and on prepaid cards) will be implemented in parallel with the continued use of deferred debit cards, in view of the advantages inherent in it for households and businesses.
v The Governor of the Bank of Israel has declared the interchange fee for immediate debit transactions as a fee under supervision, which will be set at 0.3 percent (compared to the average interchange fee of 0.7 percent that is currently customary for regular debit transactions), for a period of one year, in order to make it possible to prepare for the fee to be set by the Anti-Trust Commissioner. This reduced fee will come into effect as of April 1, 2016.
v The Supervisor of Banks has set out directives for the distribution of debit cards to bank customers, according to which the banks will be required to contact all of their customers by December 31, 2016, to offer them a debit card at no cost (if the customer holds an additional payment card) or at a reduced cost (if the customer does not have any payment card). The Supervisor has also set out disclosure rules and rules for immediate accounting of transactions carried out through a debit card, as of April 1, 2016.
v In parallel, the Bank of Israel has set out directives for implementing a security standard for transactions using EMV credit cards, both on the issuance side and on the settlement side. EMV cards must be issued from October 1, 2015, and EMV transaction settlement is required as of July 1, 2016. Additionally, as of October 1, 2015, new terminals connected to the system will be required to support the standard from a hardware standpoint, and with the EMV software as of July 1, 2016.
The directives have been published today, in accordance with the report of the designated team examining these issues, which was published on February 10, 2015, and after receiving comments from the public, and from entities active in the payment cards market.
Supervisor of Banks David Zaken said, “These measures will contribute to an increase in competition in the area of payment cards, and will put debit cards into wide circulation, while reducing costs for businesses and households. It is important to do so without negatively impacting the consumer’s ability to choose the payment method most appropriate for him—immediate debit or deferred debit.”