Accepting payments in Israel means entering a growing market where total ecommerce revenue is expected to increase from $7.55 billion in 2023 to $11.83 billion in 2027. Understanding local payment preferences, including the prevalence of credit card transactions, can help your business attract Israeli customers and increase conversion rates.

Below, we’ll explain how a business can successfully enter the Israeli market by:

• Diversifying payment methods
  
• Boosting payment security measures
  
• Communicating in Hebrew and Arabic
  

The state of the market

While Israel still relies on traditional payment methods, there’s an ongoing shift toward digital solutions. Cash transactions in Israeli shekels—also called new Israeli shekels or NIS—are still used for day-to-day transactions, but credit cards have far surpassed cash to become the most common payment method.

Israel’s central bank, the Bank of Israel, has substantial influence in formulating monetary policy and overseeing the stability of the nation’s financial system. Its 2023 framework provided international payment service providers access to local systems. The Israel Securities Authority is responsible for regulating capital markets, supervising public companies, and protecting investor interests. These agencies work together with the Ministry of Finance, which sets the economic agenda for the nation.

Payment methods

Israel’s payment system contains a blend of traditional and modern methods. Here’s how Israeli customers prefer to pay.

Current usage

Cards are the most preferred payment method in Israel, accounting for nearly 70% of purchases in 2022. Cash and check payments constituted less than 10%. Direct debit and direct credit each accounted for about 11% of transactions.

Contactless payments, supported by near-field communication (NFC) technology, are becoming more common, particularly for peer-to-peer (P2P) payments. In 2023, a majority of Israelis (almost 55%) reported using payment apps to send money to friends. This highlights an increased trust and a broader acceptance of the payment method.

There are numerous local mobile payment options in Israel that allow users to transfer money without the need for cash or even a physical bank branch—including Max, Leumi App, Isracard, PayBox, BitPay, and AnyPay—but many Israelis also use international options including Apple Pay and Google Pay.

Popular B2C payment methods in Israel

• Credit and debit cards
  
• Mobile payments
  
• Digital wallets (e.g., Apple Pay)
  
• Cash
  

Popular B2B payment methods in Israel

• Credit cards
  
• Bank transfers
  
• Direct debits
  

Emerging trends

The buy now, pay later (BNPL) market in Israel is expected to reach $1.37 billion USD in 2025 and grow to $4.37 billion USD by 2028. Popular BNPL providers including Splitit, Jifiti, and Sunbit Israel give customers the flexibility to split purchases into multiple installments.

Ease and friction of entry

Businesses contemplating accepting payments in Israel must factor various aspects of the payment system into their plans, including value-added tax (VAT) and chargeback processes. Here’s a rundown.

Taxes

Israel’s VAT rate for most goods and services is 18%. While customers pay this tax up front, the business is responsible for collecting and remitting it to the government. Applying and submitting VAT correctly is important, as any discrepancies can lead to financial penalties.

Chargebacks and disputes

Israel’s Consumer Protection Law governs transactions between businesses and customers, aiming to protect the latter from deceptive practices and emphasize transparency. When it comes to unauthorized transactions or issues with delivered products, customers have a right to dispute charges. As with European dispute resolution policies, businesses in Israel have the responsibility of validating the legitimacy of a transaction.

Credit card companies in Israel such as Isracard, Leumi Card, and Cal are actively involved in the chargeback process. They act as intermediaries and set their own guidelines for both businesses and customers that resemble those set by global credit card giants such as Visa and Mastercard.

International payments

With its global business outlook and a steady stream of international visitors, Israel has a strong need for effective, transparent cross-border payment mechanisms. Here are a few aspects to consider.

• Currency conversion
  Transactions involving a currency other than the Israeli shekel will likely require currency conversion. The conversion rates for these services are determined during the transaction, with fees often ranging from 1%–3% of the transaction value. Depending on the business’s policy, the business might absorb this fee or pass it on to the customer.

• Multicurrency solutions
  Many businesses that cater to international clients use multicurrency features through their payment service providers. Showing customers prices in their local currencies can help build trust and increase customer satisfaction. While integrating these solutions might come with associated costs, the potential to tap into a broader customer base often outweighs the initial investment.

• Anti-Money Laundering (AML) regulations
  For B2B payments in particular, companies should remember AML laws when handling large international transactions. Most of the requirements relate to financial entities, but the laws can impact businesses if a payment is flagged as suspicious.

Security and privacy

Israel adapts its payment security environment for the latest technologies. The country has a comprehensive framework for cybersecurity. Several key factors and regulatory bodies shape transactions, including:

• Data protection laws
  Israel’s Protection of Privacy Law, first established in 1981 and amended several times since, mandates that businesses collecting or processing personal data safeguard that data and register their databases with the Privacy Protection Authority (PPA). The law also outlines the rights individuals have over their data, similar to the General Data Protection Regulation (GDPR) in Europe. The PPA oversees the law’s enforcement.

• Customer authentication requirements
  Following global standards, Israel has adopted Strong Customer Authentication (SCA) practices. Payment service providers must use transaction authenticity measures; multifactor authentication is often required as well.

• AML protocols
  Israel’s Prohibition on Money Laundering Law requires financial entities to implement rigorous controls, including Know Your Customer (KYC) practices, routine transaction monitoring, and reporting of suspicious activities. The Israel Money Laundering and Terror Financing Prohibition Authority oversees the law’s enforcement.

• Financial services oversight
  The Capital Market, Insurance and Savings Authority (CMISA) supervises nonbanking financial institutions and ensures that they comply with the necessary regulations.

Key success factors

While the Israeli payment market follows international best practices and shares similarities with the European payment sector, it has unique local preferences and regulations that your business should plan for. Here’s how to prepare your business for success in Israel.

• Traditional card payments
  Although the popularity of contactless payment methods is increasing worldwide, adoption in Israel hasn’t been as quick as in countries such as the United Kingdom (UK). So it’s important to support multiple payment avenues. You should accept traditional credit and debit card payments for both in-person and online transactions to ensure customers can find a payment method they use.

• Enhanced mobile payments
  Though credit cards are the most popular payment method in Israel, mobile payments are on the rise; in ecommerce, for instance, 40% of transactions are made with a mobile device. You can take advantage of this trend by accommodating mobile payment apps and digital wallets, and updating your payment interfaces to work well on mobile devices.

• Translated customer interfaces
  Hebrew and Arabic are the most commonly spoken languages in Israel. Offering customer support and payment interfaces in both can improve the overall payment experience for Israeli customers and build trust in your business.

• Elite data security protocols
  Israel has seen rising rates of cyberattacks, showing the importance of strong data security in payment systems where personal and financial data are exchanged. Complying with the Payment Card Industry Data Security Standards (PCI DSS) and auditing your systems regularly can mitigate these risks.

Key takeaways

Israeli customers use a mix of payment methods. They often favor credit cards and newer payment methods such as mobile payments. Recognizing and accommodating these preferences can increase transaction completion rates. Here’s a recap, along with specific tactics for accepting payments in Israel.

Diversify payment methods

• Embrace credit card payments
  Because credit cards are the most common payment method among Israeli customers, your business can benefit from accepting local and international card schemes.

• Refine for mobile transactions
  Ensure your payment pages function smoothly on smartphones and tablets, and choose a payment gateway that can accommodate various mobile payment apps and digital wallets.

• Provide local and global options
  Both local and international mobile payment options, from PayBox to Apple Pay, are popular in Israel. Communicate to customers which local and global payment methods you accept to avoid confusion.

Boost payment security measures

• Use secure payments infrastructure
  Pick a payment gateway that uses encryption methods to safely transmit sensitive transaction details such as credit card numbers. Without secure infrastructure, it’s difficult to protect customer data and prevent fraudulent activities.

• Comply with Israeli data protection standards
  Israel’s Protection of Privacy Law sets the national standard for data handling and protection. Strict adherence to these regulations can also build trust among customers concerned about data security.

• Adopt global best practices
  While Israel has specific security challenges, adhering to global best practices such as the PCI DSS is still a good way to instill confidence in both local and international customers.

Communicate in Hebrew and Arabic

• Translate customer interfaces
  Israelis predominantly speak Hebrew, and part of the population speaks Arabic. A localized payment interface will resonate with customers. Hebrew and Arabic interfaces eliminate the need for translation and enable nuanced language and cultural references that impact the payment experience.

• Provide localized customer support
  Immediately resolving payment queries shows that your business values customers’ time. Providing fast support, especially in Hebrew and Arabic, can ease potential issues in the payment process and increase repeat business.

• Communicate clear refund and dispute resolution policies
  A well-defined refund and dispute resolution policy can alleviate areas of potential friction and let customers know your business prioritizes transparency.