Regulatory AlertsIsrael: fintech & payments regulation
RegulatedIsrael: Payment Services Law 2015; BoI regulates VASPs & payment institutions
- Lead regulator
- Bank of Israel
- Also involved
- Israel Money Laundering and Terror Financing Prohibition Authority (IMPA) · Israel Securities Authority (ISA)
- Core law
- Payment Services Law, 5775-2015
- Entry capital
- NIS 500,000 (Payment Institution)
- Approval timeline
- 3-6 months
- Customer assets
- Segregated in trust account at licensed bank
- Data protection
- Privacy Protection Law, 5741-1981 · Israel Privacy Protection Authority (IPPA)
- Sandbox
- Yes - Regulatory Sandbox
Israel regulates fintech and payments primarily under the Payment Services Law, 2015, supervised by the Bank of Israel (BoI). The regime distinguishes between Payment Institutions (PIs) and Virtual Asset Service Providers (VASPs). PIs require a license and capital, while VASPs are registered. The regulatory stance is strict on AML/CFT and consumer protection, with the BoI actively enforcing compliance through directives.
Which licence do you need?
| Your activity | Requirement | Capital | Timeline | Authority |
|---|---|---|---|---|
| Payment processing / gateway | LicencePayment Institution License[1][2] Requires PI license under Payment Services Law | NIS 500,000 | 3-6 months | Bank of Israel |
| E-money & wallet issuance | LicencePayment Institution License[1][2] Issuing electronic money requires PI license | NIS 500,000 | 3-6 months | Bank of Israel |
| Domestic money transfer | LicencePayment Institution License[1][2] Domestic transfers fall under PI license | NIS 500,000 | 3-6 months | Bank of Israel |
| Cross-border remittance | LicencePayment Institution License[1][2] Cross-border remittance requires PI license | NIS 500,000 | 3-6 months | Bank of Israel |
| Agent network | LicencePayment Institution License[1][2] Agent networks must be approved by licensed PI | NIS 500,000 | 3-6 months | Bank of Israel |
| Open banking / account information | Uncertainverify with regulator No specific open banking law; relies on general payment rules | — | — | — |
| Foreign-exchange services | LicencePayment Institution License[1][2] FX services require PI license | NIS 500,000 | 3-6 months | Bank of Israel |
New — what changed recently
- 2024-04-09Directive 03/24 — BoI issued comprehensive framework for broker-dealer activities of banking corporations[3]
- 2023-11-21Temporary Directive (Swords of Iron) — BoI granted operational flexibilities to banks due to war impacts[4]
- 2023-08-13Amendment to Directive 450 — BoI amended debt collection procedures to align with legislative updates[5]
Market-entry checklist
- 1Secure PI License from BoIApply for Payment Institution License with NIS 500,000 capital and approved business plan.
- 2Register with IMPA for AMLRegister as a reporting entity with the Israel Money Laundering and Terror Financing Prohibition Authority.
- 3Establish Segregated AccountsOpen trust accounts at licensed banks to hold customer funds separately from corporate assets.
- 4Implement KYC/AML SystemsDeploy robust customer identification and transaction monitoring systems compliant with BoI directives.
- 5Appoint Compliance OfficerDesignate a qualified compliance officer responsible for AML/CFT and regulatory reporting.
Sources
- Banking Ordinance, 1941 · 2025-05-19
- Banking (Licensing) Law, 5741-1981 · 2024-12-30
- A Banking Corporation’s Activities as a Broker-Dealer · 2024-04-09
- Adjustments to Proper Conduct of Banking Business Directives for the “Swords of Iron” War (Temporary Directive) · 2023-11-21
- Bank of Israel Circular C-06-2627: Amendments to Proper Conduct of Banking Business Directive no. 450 · 2023-08-13