Israel Launches Banking Reform, Cutting Fees and Overhauling Account Structures
Translated & summarized from Cursorinfo by baba
Israel's banking sector is undergoing a major reform starting October 1, introducing lower fees for debit cards and eliminating several outdated charges. A second phase in 2027 will introduce a new flat-fee structure for account management.
The story in 5 lines · by baba
- Debit card service fees capped at 7 shekels monthly.
- Outdated banking fees for account searches and inheritance matters abolished.
- New flat-fee account management system to launch July 1, 2027.
- Mortgage payment date change fee limited to 5 shekels.
- Reform aims to protect consumers and reduce financial burdens.
Israel is implementing a significant banking reform initiated by the Bank of Israel, with the first phase taking effect on Thursday, October 1, aimed at protecting consumers, reducing financial burdens, and eliminating outdated fees. The most noticeable change affects popular debit cards, where the maximum monthly service fee will be reduced to 7 shekels from the current 9 shekels. With approximately 1.8 million such cards in circulation, this change is expected to save cardholders tens of millions of shekels annually.
Additionally, the banking supervisor is canceling several old fees. Financial institutions will no longer be able to charge for searching for accounts or handling matters related to inherited property. The fee for checks returned by the bank for technical reasons will also be completely abolished. Furthermore, a strict limit of 5 shekels will be imposed on the fee for changing the date of a monthly mortgage payment, applicable to the first four changes within a year.
The second phase of the reform is scheduled for July 1, 2027. This phase will replace the current system of paying for each individual banking transaction with a unified "payment account management" service. All customers will be automatically transitioned to this new system. A standard package covering 100 basic operations will cost no more than 10 shekels per month, while customers making minimal transactions (up to two per month) will pay a maximum of 5 shekels. For comparison, the average monthly cost for current account maintenance in 2025 was 11.7 shekels, according to Bank of Israel data.
While banks can theoretically adopt the new commission system early, experts doubt they will do so voluntarily due to the required IT system upgrades and potential revenue loss. The level of competition in the Israeli banking sector is considered low, which may hinder banks from proactively offering more favorable rates to attract customers. Despite past instances of early legislative compliance, such as Mizrahi Tefahot Bank's early adoption of opening deposits for clients without current accounts, the fee structure is different. Bank customers are generally reluctant to switch financial institutions, even when complaining about high fees.
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