Joining the worldwide payments revolution for the sake of economic growth - opinion

The Finance Ministry recently published disturbing data reflecting the problematic reality Israelis deal with daily: 41% of small businesses that needed a credit supplement were left with no response. The new data continues to uncover how the credit suffocation of small businesses causes them to be significantly less successful, failing to expand operations and become intermediate-sized. In practice, Israel prevents its own economy from prospering.

Innovation is what drives us forward as a society. It is how we grow and progress, improve efficiency and expand knowledge. The secret of Israel’s great economic success lies in innovation and technology, earning it the impressive title of “the start-up nation.”

The world of digital payments 

Check Point Software Technologies, Mobileye Global, Amdocs, Elbit Systems, Fiverr and CyberArk are just a fraction of the globally famous companies we can be proud of as a nation. But when it comes to the field of digital payments, which has changed the rules of the market around the world, Israel lags behind.

Together with rising interest rates and several commissions that entered the businesses’ daily operations, many owners continue to use old-fashioned checks as the only solution to making necessary transactions.

According to the Bank of Israel, the total number of transactions via checks stands at NIS 812 billion compared to only NIS 300 b. via credit cards. It is then clear that paper checks are still broadly used, despite their outdated nature in our modern technological world.

The Bank of Israel understands the significance of advancing to a digital, secure and instant payment method and works hard to promote the change. This February, the bank announced that the involved players in the payment field must be prepared to accept R2P (Request to Pay)-type payments by the end of 2023.

This move came after previous requirements to prepare for instant payments according to global standards. The bank went the extra mile and published a public appeal to develop a digital check, together with allowing foreign fintech companies to enter the Israeli payments field.

The Capital Market Authority joined the Bank of Israel’s efforts and recently granted a digital check, the first official certificate of approval. This approval allows more businesses and individuals to use a digital check as a legally valid property, which grants them the certainty of a traditional check. More than 16,000 businesses and individuals in Israel have started using digital checks, but these are still small numbers compared to the number of paper checks.

Decision-makers are slowly unleashing the reins that have prevented us from enjoying the modern payment technology widely available around the world. For business owners, self-employed, freelancers and individuals who find the concept of checks as the only pestering solution for payments, this is wonderful news. Digital payments are an effective solution to a national problem and thus we must implement them into our payments culture as soon as possible.

The writer is the founder and the CEO of V CHECK, which develops digital cheque solutions and an online collection system.