The Israel Securities Authority (ISA) has granted payment institution licences to international fintechs Revolut, Airwallex, Rapyd, and Mesh Payments.
The initiative aims to increase competition in financial services, expand fintech presence in the country, and enable firms to operate in Israel within a regulated environment.
Promoting competition in Israel’s financial ecosystem
With the licence, the four companies will be able to transfer and convert currency, offer interest on deposited funds, and settle digital wallets. The ISA believes that it is important for the fintechs to have the ability to deliver interest to their customers and integrate securities despite the Bank of Israel’s opposition. Additionally, the authority hopes that the licences granted will boost the companies’ presence even further in the region, competing with services provided by local banks and offering more convenience when transferring money to and from Israel.
The ISA also mentioned that, in order for companies to compete in the banking system, they need support to be able to provide a broader range of financial services. The authority aims to help fintechs that want to enter the country’s financial ecosystem, hoping that firms will cover niches where the banking system has difficulty providing solutions, such as managing underage individuals’ finances.
Licensed companies will be subject to requirements to keep their clients’ funds separate from their own and comply with obligations regarding risk management and AML rules. These laws require transparency in payment contracts, clear disclosure of terms, and safeguards against misleading practices. This aims to ensure that the firms will operate in accordance with the law while keeping their clients safe. Licences, if granted, should also allow non-fintechs, such as intermediary companies, to widen their range of financial services in Israel.
While Revolut, Airwallex, Rapyd, and Mesh Payments have a limited presence in the country, the licences aim to support their expansion and offer more alternatives and variety to Israeli consumers. The fintechs are projected to focus on underserved segments such as digital financial management tools for children and more affordable cross-border transactions.
