Chapter On Fintech (2nd Edition)

Author:Mr Yuval Shalhevet, Itamar A. Cohen and Roy Keidar
Profession:Yigal Arnon & Co
  1. What are the sources of payments law in your jurisdiction?

    Until recently, there was no specific legislation regulating all the aspects of payments in Israel, although there were several laws and regulations which handled certain fragments or types of payment services.

    On January 2019, the Knesset (the Israeli Parliament) enacted the Payment Services Law, 5779-2019, which was supposed to become effective on January 2020 but its validity is likely to be postponed until July 2020.

    Until the Payment Services law is effective, the regulation of payments is based on the current existing laws:

    The Charge Cards Law, 5746-1986 which deals with the relationships between holders of charge cards (credit cards, debit cards, payments cards and bank (ATM) cards) and the issuers thereof. It grants several consumers protections and imposes several duties on the issuers including, among other things, a requirement for a written agreement, disclosure requirements, protection against fraud and unauthorized use and rights regarding card-notpresent transactions. The said law also regulates the termination of charge card agreements. banking regulations: since many payment services are provided by banks, the regulation applicable to banks are relevant to payments. The Banking (Services to Customers) Law, 5741-1981 and the regulations promulgated thereunder define general disclosure and contractual requirements relating, among other things, to payment services. In addition, the Banking Ordinance, 1941, and the "Proper Conduct of Banking business" ("PCB") directives which the Bank of Israel issued pursuant to the said ordinance relate to certain payment services: (i) standing orders [PCB no. 439]; (ii) use of ATMs [PCB no. 442]; and (iii) charge cards [PCBs no. 470, 471 and 472]. The Payments Systems Law, 5768-2008: this law is not a "payments law" but rather regulates the authorization of controlled payment services. Nonetheless, the said law determines the finality an irrevocability of payment made in a controlled payment system. The "Zahav" payment system, which provides RTGS services in Israel, was authorized as a Designated Controlled Payment System pursuant to the said law. The rules relating to the operation thereof are set forth in the agreement between the Bank of Israel and the operator of the Zahave system (which was appointed by the of the Bank of Israel) – the Tel Aviv Stock Exchange Settlement System. [In order to support the finality of the Zahav System and the stability thereof, the members of the Zahav system are required to keep at all time sufficient liquidated funds (cash or governmental bonds) securing their gross liabilities...

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