The Bank of Israel Caps the Cost of Bank Current-Account and Debit Services

The Bank of Israel published on June 21 a reform that places two basic services under price caps: payment-account management and debit-card fees. The first-order exposure is the banks, because they collect current-account fees and issue bank debit cards. The second-order exposure is Isracard, Max IT and Shva, because the reform does not set a general cap on credit-card fees or acquiring income, but can indirectly affect payment habits and the way banks package services. Timing matters: the debit-card fee cap starts in October, and the new payment-account management service starts in July 2027. This is therefore not an immediate hit to the entire payments market, but a staged move that narrows retail fee income at banks and raises the need to check which institutions depend more on basic household and small-business fees.

The Reform Sets Two Prices, Not a General Credit-Card Reform

The reform replaces part of the existing fee structure with a new "payment account management" service. The service bundles basic daily operations such as account credits and debits, cash deposits and withdrawals, transfers, cheque activity and voucher payments. A bank may charge an individual or small-business customer a fixed fee for up to 100 operations per month.

The capped price for this service will be up to NIS 10 per month for the first 100 operations, up to NIS 5 per month if 0-2 operations are carried out, and up to NIS 1 for each additional included operation above 100. This part will enter into force in July 2027, with banks allowed to adopt it earlier.

The second part is debit-card fees. The Bank of Israel sets a NIS 7 monthly cap for debit-card fees, compared with an existing average tariff of about NIS 9 according to the supervisor's announcement. This part will enter into force in October and replace the existing three-year exemption arrangement that depends on the customer also holding a credit card.

Banks Are the Direct Fee Exposure

The direct exposure sits with Leumi, Hapoalim, Discount, Mizrahi Tefahot, First International and Bank of Jerusalem. All operate current accounts for households and small businesses, and all operate inside the bank-fee tariff framework supervised by the Bank of Israel.

The effect will not be identical across banks. A bank with a broader household and small-business customer base is more exposed to basic current-account services. A bank more weighted toward interest income, mortgages, business activity or capital-markets activity may absorb the reform differently. The existing discount and exemption structure also matters: if many customers already use low-cost packages or receive debit-card fee exemptions, the incremental negative effect is smaller.

The possible offset is flexible service packages. The Bank of Israel allows banks to offer unique packages, subject to approval by the Banking Supervisor. The test in future reports should therefore not stop at "how much fee income declined." The key questions are whether banks move customers into other packages, whether basic fees decline without offset, and whether competition for households and small businesses becomes sharper around current-account pricing.

Card Companies and Shva Sit in the Second Circle

The easy mistake is to apply the reform directly to the entire credit-card market. That is not what the Bank of Israel published. The debit cap applies to a debit card issued by the bank where the customer manages the account. It is not a general cap on credit-card fees, acquiring fees or consumer-credit margins.

Isracard and Max IT are therefore mainly indirect exposure. If debit cards become cheaper and more accessible, some customers may use them more for daily payments, and banks may change the way they package account, debit and credit-card services. But credit-card companies also depend on acquiring, credit, customer clubs, bank and retailer agreements, and funding costs. The reform does not decide all of those components.

Shva is different again. It is not the bank charging the account fee and not a consumer-credit company. Its exposure is infrastructure-driven: greater use of digital payment methods, a changing debit-versus-credit mix, and competition around payment services can affect system volumes over time. But the announcement itself does not create a direct price cap on Shva.

What to Watch in the Next Reports

The reform enters in stages, so the financial-statement effect will also appear gradually. In October, the focus is debit-card fees. In July 2027, it moves to payment-account management. For banks, the relevant lines are fee income, any available breakdown of account-management and card fees, customer movement into packages, and each bank's competitive response.

For credit-card companies, the test is different: whether transaction mix shifts between debit and credit, whether issuance and acquiring agreements with banks change, and whether retail customer clubs continue to function as independent revenue drivers. For Shva, the important data point is transaction volume and mix across its systems, not the bank-fee cap itself.

The current read is that the Bank of Israel reform is first a retail-banking event. It narrows the pricing range for a basic service, makes bank comparison easier, and increases pressure on current-account and debit fees. Credit-card companies and Shva may feel the change through customer behavior and bank pricing, but they are not the direct targets of the published caps.