Digital Wallets Overtake Cash in Israel, Bank of Israel Report Shows

The use of digital wallets in Israel has surged dramatically, with 47% of the public now using them weekly, compared to just 5% six years ago, according to a new Bank of Israel report. This rise in digital payments has coincided with a significant decline in cash usage, which has fallen from approximately 80% to 48% for weekly transactions. The report, which draws on data from the Central Bureau of Statistics and annual public opinion surveys, indicates that cash still accounts for 32% of daily expenses and 43% of transaction volume, primarily for smaller purchases.

Cash remains dominant for transactions under 10 shekels, with 63% paid in cash, and still represents half of transactions between 10 and 50 shekels. However, its use decreases for larger amounts, accounting for 31% of transactions between 200 and 500 shekels. The report highlights significant disparities in cash usage across socioeconomic groups and communities, with higher reliance on cash in lower socioeconomic areas and the Arab community compared to stronger communities and the Haredi sector. This suggests that certain populations could be disproportionately affected by the closure of ATMs or the discontinuation of cash acceptance by businesses.

Many Israelis, around 70%, still wish to use cash in the coming years, citing control over spending as a primary reason, with others viewing it as a crucial backup for economic or security crises. This sentiment has been reinforced by events like the October 7th attacks, leading to an increase in people setting aside cash for security. The Bank of Israel, through its Director General Yoram Cohen, stated its commitment to ensuring the availability and accessibility of cash while also promoting digital payment methods, including the potential issuance of a digital shekel.

Globally, cash usage is also declining, though many countries are enacting legislation to guarantee access to physical currency. In Israel, the number of ATMs has increased, with plans for cardless withdrawals by 2030. The Bank of Israel's Currency Department Director, Limor Goldstein, emphasized the ongoing efforts to maintain the resilience of the cash system and ensure accessibility across the country, despite the evolving payment landscape. This comes as Israel's own 2019 law to reduce cash use, aimed at combating the black market, has seen stricter enforcement since 2022.