Payment systems in Israel
What are payment systems?
Payment systems are groups of rules, instruments, and procedures for the transfer and execution of payment orders between participants, including operators.
What is settlement?
An action that releases liabilities between two or more parties, concerning the transfer of money, securities, or other financial assets.
What payment systems operate in Israel?
There is a wide variety of payment systems in Israel, including high-value settlement systems and retail payment systems.
Payment systems operated by the Bank of Israel – ZAHAV and Paper-Based Clearinghouse
The ZAHAV system is useful for the final transfer of large amounts in real time.
The Check's Clearinghouse is intended to settle physical payment messages (checks and various debits and credits).
Other major payment systems operating in Israel
- The Debits, Credits and Transfers System operated by MASAV (Bank Settlement Center). Its activity includes: 1) Automated Clearinghouse (ACH) activity – transfer of deferred electronic debit and credit instructions in shekels (standing bank orders, salary payments, tax payments, and more); and 2) Faster Payments activity – real-time transfer of retail payments.
- Continuous Linked Settlement (CLS) is an international settlement system for currency conversion transactions, which is operated by the CLS Bank. This system settles the Israeli currency against foreign currencies that are settled by CLS.
- Stock Exchange Clearinghouses (includes the Tel Aviv Stock Exchange Clearinghouse and the Maof Clearinghouse). These clearinghouses settles all transactions made on the Tel Aviv Stock Exchange and on MTS (a trading environment for main marketmakers). They transfer the securities from the seller to the buyer, and the monetary price from the buyer to the seller. In order to reduce the risk to buyers and to sellers, the clearinghouse serves as a central counterparty (CCP), taking on the risk that one of the parties will not complete his part of the transaction. All securities are cleared on the day following the transaction (and the money and securities are transferred between buyer and seller simultaneously (Delivery vs Payment – DvP), as is common in the more advanced clearinghouses around the world. The Stock Exchange Clearinghouses also provide securities escrow services, wherein the securities are registered in the name of a Stock Exchange member through a recording company. The Stock Exchange Clearinghouse provides securities settlement services, and the Maof Clearinghouse provides settlement services for derivatives.
- Payment Card services (Ashrait). The system provides infrastructure for the bidirectional transfer of messages between acquirers and issuers. The system collects and transfers transactions, approvals, and other details that are necessary for the execution of payment card transactions, and serves as the national payment card communication network. The networks supports all types of payment card transactions, and most payment cards around the world.
- Automated Teller Machines (ATM). The ATM network is a nationwide network shared by the banks, and enables customers from one bank to withdraw money from a machine of another bank in a secure manner that is identical to withdrawal from a machine belonging to the customer’s own bank. As part of operating the network, SHVA provides a number of services: card examination, directing the request for approval, clarification of balances, and stand-in response service.