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Palestinian Banks Shift to Electronic Payments
Palestinian banks are increasing use of electronic payments as limits on returning surplus shekels to Israeli banks create a liquidity strain. Officials say the shift is part of a broader plan to reduce cash transactions over two years.
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Palestinian banks are increasing reliance on electronic payments to manage surplus Israeli currency that cannot be transferred back under current limits. Under existing rules, Palestinian banks can return physical currency only through two Israeli banks at an annual cap of NIS 18 billion. Palestinian economist Mohammed Samhouri has stated that the ceiling covers roughly half the required volume.
Background on the Restrictions The accumulation of shekels has reached levels that threaten the banking system's ability to finance trade with Israel, according to the Arab Center Washington DC. In 2024, more than half of Palestinian Authority imports and more than 80 percent of its exports were with Israel.
Banks have begun refusing shekel deposits, creating hardship for individuals and businesses, the Palestinian Monetary Authority deputy governor told WAFA.
A new law aimed at reducing cash transactions will be phased in over two years once electronic payment infrastructure is in place. Officials said the measure is intended to strengthen the economy rather than burden the public. Talks are underway with the Bank of Israel and an international partner to raise the NIS 18 billion cap, responsibility for which shifted to the Israeli government in October 2023.
