Reg Wrap: Israel gives payment challengers central bank foothold - The Banker magazine

In a notable regulatory shift, Israel’s central bank is opening its payment infrastructure to non-bank financial technology firms. This move grants these “payment challengers” direct access to central bank settlement systems—a foothold traditionally reserved for commercial banks. By allowing fintechs to plug into the core rails of the financial system, the regulator is effectively forging a more level playing field for new entrants.

The significance extends beyond Israel’s borders. Historically, fintechs have had to rely on partner banks to clear and settle transactions, a dependency that can limit innovation and increase costs. Direct access changes that dynamic, enabling challengers to offer faster, cheaper, and more transparent payment services. For incumbents, it signals a step toward intensified competition, particularly in the retail payments space.

Market participants should watch how this framework is implemented in practice—especially regarding risk management, liquidity requirements, and oversight. If successful, Israel’s approach may serve as a blueprint for other jurisdictions weighing similar reforms. The broader lesson is clear: access to central bank infrastructure is increasingly seen as a lever for competition, not just a privilege for banks.