Money from Bit to PayBox? That May Soon Be Possible

Money from Bit to PayBox? By the end of the year, a new system from MASAV is expected to allow money transfers from Bit to PayBox, meaning between the two leading money transfer apps in Israel. So far, money could usually be transferred from those apps to the user’s bank account, but the money, which is effectively cash in every sense, could not be transferred between the apps themselves.  Bit and PayBox go head to head: the fees that rose, the losses and the approaching change  The shekel weakens for the eighth straight day. These are the reasons

A new MASAV system, the Bank Clearing Center, will enable the transfers, and its development is being completed these days, with a public launch expected by the end of the year. MASAV, headed by Ofir Kadush, enables payment transfers, including salaries, for tens of thousands of organizations in Israel, financial entities, institutional bodies and various government branches. The option of transferring money between the apps is expected to reduce the banks’ operating costs. The reason is that the current model, in which a credit card is entered and the transfers are actually carried out through it, is particularly expensive for the banks. A new MASAV system, even if it is responsible for only a small portion of those transfers, will help the banks make more efficient use of cash transfers.

The reason for the fees, an expensive model for the banks

Of the two apps, Bit, owned by Bank Hapoalim, is the country’s most popular payments app. We recently revealed in Globes that Bit is raising the fee it charges customers who receive money through it. Bank Hapoalim, which began charging a fee for the app in January last year, informed its customers that it would raise the fee in May. The fee for recipients of money via Bit will rise from 0.6% to 0.8%. It should be noted that the fee is charged to anyone who receives more than 25,000 shekels a year, and is not charged beyond the amount of 100,000 shekels, meaning that in the maximum case it reaches 600 shekels. Bank Hapoalim said then that the update applies only to about 7% of all app users. The fee is charged to those who use Bit at a commercial activity level and receive through it cumulative funds above 25,000 shekels a year, and it is not relevant to about 93% of the roughly 3.5 million active Bit users, who receive a cumulative amount below 25,000 shekels a year. At the same time, the app’s daily transfer ceiling was recently increased from 3,600 to 7,000 shekels, in order to expand money transfer options for all users.

PayBox does not charge fees, but it too has worked to reduce public money transfers by setting a limit of 1,000 shekels a month or 50,000 shekels a year for those transfers. It allows higher amounts, 10,000 shekels a month or 100,000 shekels a year, for users who issue its dedicated credit card, with no membership fee.

As noted, the reason for the fees and limits stems from the expensive model for operating the apps for the banks, which includes entering a credit card. Therefore, for each transfer, the banks involved, Hapoalim (Bit) and Discount (PayBox), are effectively subsidizing the process, and it has cost them estimated losses of hundreds of millions of shekels over the past five years, for each bank. In the future, work is underway in the banking system, through regulatory action and Knesset involvement, to enable a fast connection of the bank account to these apps, which will allow the banks to move to profitable operations in the two popular apps.

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