The Israel card payment market, which has been on the rise for the past few years, registered a decline of 3.8% in 2020 due to the COVID-19 pandemic with reduced consumer and commercial spending. However, with the gradual recovery in economic activities, card payments are expected to rise by 4.8% to reach ILS361.5bn (US$112.5bn) in 2021, according to GlobalData, a leading data and analytics company.
Israel is one of the most developed payment card markets in the Middle East and Africa region with high frequency of card usage for payments. The government has launched various initiatives to promote the adoption of electronic payments in the country with introduction of a cap on cash transactions and a reduction in interchange fees being some of the key regulatory measures undertaken to drive electronic payments.
Ravi Sharma, Lead Banking and Payments Analyst at GlobalData, comments: “Robust ecommerce growth, and increased contactless payment limit are other important factors. While the COVID-19 pandemic has resulted in reduced consumer spending, it also highlighted the importance of usage of non-cash payments, which is expected to push the use of card payments in the country.”
Like other countries globally, Israel was also affected by the COVID-19 pandemic, but government efforts in terms of lockdowns, travel restrictions, and vaccinations have seen the country tackle the pandemic effectively. In April 2021, it became the first country in the world to go mask-free outdoor after the success of its vaccination program.
The pandemic has made online purchasing more appealing in the country, as it allows consumers to avoid close social contact and help prevent the spread of the virus. The rise in online spending benefitted electronic mode of payments like cards and mobile wallets.
Even for shopping in-store for essentials, consumers are shifting from cash payments to digital payments, especially contactless payments. To support this, the central bank raised the contactless payment limit from ILS200 (US$62.22) to ILS300 (US$93.34).
Mr Sharma concludes: “The economic uncertainty caused by the COVID-19 pandemic has forced consumers to cut down on unnecessary spending, which in turn has affected the country’s card market. With businesses reopening and employment levels increasing, consumer spending is expected to grow – supporting the revival of card payments market, which is expected to grow at a compound annual growth rate (CAGR) of 7.6% between 2021 and 2025 to reach ILS485.1bn (US$150.9bn) in 2025.”
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