To Principles paper
In recent years there have been accelerated technological developments in the payment systems sector worldwide. As part of the promotion of competition in the payment services market, the Committee for Promoting Use of Advanced Means of Payment is publishing the “Principles for Regulation of Payment Services”, a document that was compiled in a subcommittee and that will serve as the basis for a legislative memorandum on the issue. Payment services regulation will enable nonbank entities to manage accounts for their customers and to provide them with payment services, including issuing means of payment, acquiring payment transactions and transferring funds. The regulation will enhance the competition in the payment services market, establish uniform consumer protections that will apply to all payment service providers and all payment services, will bolster the public’s trust in nonbank payment service providers and advanced means of payment, and will encourage technological and business innovation, while maintaining their stability and the sound operations of the payment systems.
Regulation of payment services will support the entry of new entities into the payment services sector in Israel. These entities are likely to be retail chains, Fintech companies, application developers, communication companies and additional domestic and global entities. The new entities will lead to increased efficiency in the market and will supply companies with advanced payment solutions that will simplify the process of executing transactions in the market.
Director of the Accounting, Payment and Settlement Systems Department Irit Mendelson said, “The pace of technological change in the means of payment sector is especially rapid, and regulators around the world face the same challenge: how to bring regulation in line with the changing conditions while maintaining the stability of the payment systems—stability that is critical to every modern economy. The principles that we are publishing today will encourage the development of payment services that are advanced, efficient, and reliable, which will be more convenient while maintaining the necessary level of security and credibility, and that will lead to a reform in consumer protections in line with advanced technological development. We are acting from a forward-looking perspective, so that the payment services market in Israel will be at the forefront of technology.”
In accordance with the recommendations of the Interim Report of the Joint Committee for Promoting Use of Advanced Means of Payment, which was published on November 29, 2015, and with the recommendations of the Interim Report of the Committee to Increase Competition in Common Banking and Financial Services, which was published on December 14, 2015, a subcommittee for the regulation of payment services was set up. It was led by Ms. Noa Sheshinski, Head of the Payment System Oversight Unit at the Bank of Israel, with the participation of representatives of the Israel Antitrust Authority, the Ministry of Justice and the ministry of Finance, with the goal of formulating a legislative memorandum for payment services regulation.
The Committee’s work was based on the European PSD2 (Payment Services Directive) with the necessary adjustments for the domestic market. The Principles Document reflects the Committee’s discussions and the conclusions formulated there, and will serve as a basis for writing a payment services legislative memorandum.
The Principles Document covers two main issues—regulation of the licensing of a payment institution and consumer protections
Entities interested in providing payment services, such as managing a payment account or issuing a means of payment, will be required to:
1) Acquire a license that regulates such operations for them so they can benefit from the trust of the public and the financial institutions, and can participate in the payment systems.
2) Protect the interests of their customers (private and merchants) and to ensure the receipt of a uniform level of service, to the extent possible, including:
· Uniform terms of use and consumer protections
· Ensuring customers’ funds
The public is welcome to submit its comments on the Principles Document, no later than November 20, 2016, to: