Israel’s Cards and Payments Industry: Emerging Opportunities, Trends, Size, Drivers, Strategies, Products and Competitive Landscape

Date: 2015-09

“The global financial crisis produced a brief period of recession in Israel, however, the economy quickly recovered due to the countryโ€™s fiscal policies and regulations, supported by a robust banking sector, proved optimistic for the cards and payments industry. Consequently, the collective share of electronic payment cards instruments including credit transfers, direct debit and card payments increased during the review period (2009โ€“2013) from 78.6% in 2009 to 81.4% in 2013. The countryโ€™s economic growth is anticipated to provide further impetus for the cards and payments industry over the forecast period (2014โ€“2018).
The Israeli payment cards instrument grew in value and volume terms during the review period. In terms of transaction value, the payment cards instrument grew from ILS242.6 billion (US$61.7 billion) in 2009 to ILS312 billion (US$86.2 billion) in 2013, at a review-period compound annual growth rate (CAGR) of 6.49% and is anticipated to post a CAGR of 3.93%, over the forecast period, to reach to ILS383.2 billion (US$105.7 billion) in 2018. Similarly, in terms of the number of cards in circulation, the payment cards instrument grew from 7.4 million in 2009 to 9 million in 2013, at a CAGR of 4.97% and is anticipated to post a CAGR of 2.99% over the forecast period, to reach 10.5 million in 2018.
Many factors supported review-period growth, such as increases in per capita income and payment infrastructure modernization. As banking customers become more sophisticated, banks are differentiating their product offerings and subsequently card customization for specific customer groups such as high income individuals, students and the young. Banks are making use of digital channels such as online, mobile and social media to promote their products and services.
Two key trends in Israelโ€™s credit cards market are the issuance of non-bank credit cards by credit card companies โˆ’ usually linked to customer clubs โˆ’ and the expansion of the range of services offered by credit card companies in areas such as credit and financing. This includes the issuance of revolving credit cards which allow cardholders to determine debit amounts and payment dates according to their need and ability to pay.
In terms of number of cards in circulation, the prepaid card market accounted for the smallest payment cards instrument share of 6.8% in 2013; a share that is anticipated to decrease to reach 5.5% in 2018. This is mainly due to of lack of obtainability of prepaid card variants. Currently, prepaid card variants in the form of gift cards are widely available. This offers abundant growth opportunities for banks and card issuers.
In terms of number of cards in circulation all card markets increased with the exception of the prepaid cards market. However, the prepaid cards market registered the highest review-period CAGR of 14.71%, in terms of transaction value, in comparison to credit and debit cards, which recorded respective CAGRs of 6.83% and 5.62%. The prepaid cards market increased from ILS910.1 million (US$231.4) in 2009 to ILS1.6 billion (US$435.3) in 2013 and has the potential to reach ILS2.3 billion (US$632.1 million) by the end of 2018, representative of a forecast-period CAGR of 7.08%.”


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