Isracard, Leumi Card and Visa Cal Dominate Israeli Cards and Payments Industry, States Timetric12 Jun 2013 • by Natalie Aster
In Israel, the cards industry is dominated by three companies: Isracard, which belongs to Bank Hapoalim; Leumi Card, which belongs to Bank Leumi; and Visa Cal, which belongs to Discount Bank. Currently there are five foreign banks in Israel: Citigroup, HSBC Holding, Barclays Bank, BNP Paribas and State Bank of India. During the review period, the overall cards industry registered a nominal CAGR of 5.94%. Israel’s banking system is open to foreign investment, and the government actively encourages and supports the inflow of foreign capital.
Israel’s economy recorded stable growth in 2012 at an annual rate of 2.9%, in comparison with 4.7% growth in 2011. The slow growth in GDP was mainly due to a decline in exports and low domestic consumption. According to the IMF’s annual inspection of Israel’s national accounts, Israel’s economy remains strong. The country’s fiscal strategies enabled it to avoid the global financial crisis while major economies around the world are still struggling with recession, debt and unemployment.
In terms of card volume, the credit cards category held the highest industry share of 45.5% in 2012, followed by charge cards with 45.4% and prepaid cards with 7.2%. Over the forecast period, the credit cards category is expected to register a CAGR of 4.25%. The prepaid cards category is expected to post the highest growth with a CAGR of 5.36%.
According to the report “Emerging Opportunities in Israel’s Cards and Payments Industry: Market Size, Trends and Drivers, Strategies, Products and Competitive Landscape” by Timetric, mobile payments is an emerging trend in the payments industry. Mobile payment systems allow merchants to process credit and debit card payments on smartphones and tablets, and are gaining popularity in Israel as an alternative to traditional point-of-sale or online platforms. Israel’s largest card issuer and acquirer, Isracard Ltd, entered into an agreement with VeriFone Systems, a US-based provider of secure electronic payment solutions, in October 2012, through which Isracard will market VeriFone’s SAIL-encrypted card readers for iOS and Android devices.
Emerging Opportunities in Israel’s Cards and Payments Industry: Market Size, Trends and Drivers, Strategies, Products and Competitive Landscape
Published: April, 2013
Price: US$ 4,495.00
In July 2011, The Knesset Economic Affairs Committee in Israel approved a bill submitted by the Ministry of Finance to amend the Banking (Licensing and Clearing Credit Card Transactions) Law which was formulated by the Accountant General in the Ministry of Finance, in collaboration with the Bank of Israel and the Ministry of Justice. According to the bill, an issuer of 10% or more of credit cards, or of total credit card transactions, is classed as a large issuer and must allow other clearers to clear transactions executed using large issuers’ debit cards. This move is expected to increase competition in the clearing market, enabling primarily small business owners, who have less bargaining power, to choose the credit card company with which they contract to accept the major cards currently available in the market. The bill also contains a proposal to allow new competitors to enter the credit card issuance market.
Two key trends in Israel’s credit card category are the issuance of non-bank credit cards by credit card companies, usually linked to customer clubs or consumer or other entities, and the expansion of the range of services offered by credit card companies in the area of credit and financing to cardholders and merchants, including through the issuance of revolving credit cards which allow cardholders to determine debit amounts and dates according to their needs and ability to pay. In Israel, the cards and payments industry is yet to be explored to its full potential by card issuers.
More information can be found in the report “Emerging Opportunities in Israel’s Cards and Payments Industry: Market Size, Trends and Drivers, Strategies, Products and Competitive Landscape” by Timetric.
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