Israeli Fintech Is Rebuilding SMB Payments

Published in Fintech & Public Markets — olam.business

For years, Israeli small businesses accepted payments on terms largely set by banks, acquirers, and legacy infrastructure. That system is beginning to change.

A new layer of payment rails is being built underneath the Israeli economy — and it is not being built by the banks. It is being built by Grow Payments, Payoneer, Rapyd, and a class of fintech companies that — for the first time in the country's history — have direct access to the rails the Bank of Israel runs.

This is what's changing. And who is changing it.

The fragmented stack

Start with the merchant's reality. An Israeli SMB in 2026 — a beauty clinic, a boutique law firm, a B2B consultancy — receives payment across at least four channels that almost never speak to each other.

Card payments flow through legacy acquirers — Isracard, Max, Cal — and clear through Shva, the country's card-clearing utility. Settlement is T+1 to T+3. Chargebacks run through processes Israeli merchants describe as opaque.

Bank transfers flow through MASAV, which operates both the legacy ACH system and a faster-payments rail that now supports real-time retail transfers. High-value settlement clears through ZAHAV — the Bank of Israel's real-time gross settlement system.

Peer-to-peer app payments — overwhelmingly Bit, with PayBox a distant second — were until recently free, and quietly captured a generation of Israeli consumers. Bit alone now reports roughly 3.5 million users and approximately 90% of P2P transfer volume.

And then there's the international gap. Stripe — the default global online payments processor — does not operate in Israel. Cross-border SMBs either route through a U.S. LLC or accept PayPal at premium fees.

Four channels. Four sets of fees, settlement windows, dispute processes, reconciliation problems. For the operator, that isn't a payments stack. It's a tax on running a business.

Why the old model is breaking

Two pressures are dismantling the legacy structure simultaneously.

The first is regulatory. In August 2024, the Bank of Israel announced that three nonbank entities — Grow Payments Ltd., Global Remit, and Ofek Joint Credit Union — would begin operating directly on the country's core payment infrastructure. First time in Israeli history that nonbank fintechs were granted direct access to ZAHAV and the Shva card infrastructure. The objective: expand access, increase competition, reduce dependence on the banking system.

That isn't regulatory marketing. That's a thesis statement.

The second pressure is consumer. The free P2P era ended in January 2025, when Israel's Supervisor of Banks permitted Bit and PayBox to begin charging fees — approximately 1% on customers whose annual transaction volume exceeds NIS 25,000. Bit had lost an estimated NIS 700 million since its 2017 founding; PayBox roughly NIS 250 million. The banks subsidized a generation of Israeli payment behavior, and that subsidy is now being repriced. SMBs that quietly built their checkout around "send me Bit" now pay for the privilege.

Together, these two shifts open a real market for a new payment-infrastructure layer aimed squarely at small business.

The new infrastructure layer

Grow Payments is the cleanest example of what comes next.

Grow operates directly on ZAHAV and the Shva payment-card infrastructure. It integrates with the invoicing software Israeli small businesses already use — Greeninvoice, Sumit, EZcount — and lets a merchant send an invoice with a payment link that accepts credit card, Apple Pay, Google Pay, and Bit. The customer pays. The receipt issues automatically. Settlement runs on rails the Bank of Israel itself operates.

This is the infrastructure transition. The bank-owned acquiring oligopoly is being routed around — not by a competing acquirer, but by a nonbank operator with direct access to the same final-settlement infrastructure the banks themselves clear through.

The implications are concrete. Faster settlement. Lower fees, because the intermediary stack is shorter. Native integration with the invoicing tools that already sit inside the merchant's accounting flow. And — most importantly — bank-transfer-based checkout, which functions as an alternative to card processing for a category of transactions where cards never made commercial sense.

The global rails: Payoneer and Rapyd

Two other Israeli-founded companies sit alongside Grow but solve a different problem: cross-border.

Payoneer, publicly traded on Nasdaq, serves the Israeli freelancer, agency, and SMB exporter — anyone invoicing international clients. Receiving accounts in multiple currencies, a working-capital product, a virtual card. For the Israeli founder selling to Stripe-supported geographies, Payoneer is what fills the gap Stripe leaves.

Rapyd is the infrastructure play — a payments-as-a-service platform serving merchants and platforms globally. Israeli e-commerce operators integrate Rapyd to accept local payment methods across markets. The appeal isn't the brand. It's the breadth: one integration, many local rails.

Neither competes with Grow. They are complementary layers of a stack that replaces what the bank-owned model used to deliver — and adds capabilities the bank-owned model never delivered at all.

The faster-payments shift

Beneath all of this sits a technology change inside the Bank of Israel itself.

MASAV's Faster Payments service now clears retail bank transfers in real time. Money moving between Israeli bank accounts in seconds rather than overnight — that single capability quietly reshapes what is possible at checkout. Direct-debit and pay-by-bank flows become commercially viable. Invoice-to-payment cycle times collapse. The case for routing certain transactions outside the card networks gets stronger.

It also changes what a payment processor is. A processor that sits on top of faster-payments rails plus direct ZAHAV access does not need to subsidize a card-network economy. It is a structurally cheaper business with structurally faster product cycles. That's the opportunity Grow and the next wave are building into.

What this means for Israeli SMBs

For the operator running a business in 2026, three things are now true that were not true in 2022.

First, the choice of how to accept payment is no longer the bank's to make. A small business can route invoicing, card acceptance, bank-transfer checkout, and digital-wallet collection through a single fintech operator with direct infrastructure access. The acquirer-merchant relationship is becoming a tier of the stack — not the stack itself.

Second, settlement speed is now a competitive variable. Cash flow has always been the small-business pressure point. Faster settlement — hours, not days — is technologically available. Operators who switch capture it. Operators who don't, don't.

Third, the cost stack is being repriced. The bank-owned acquiring oligopoly priced for an environment with no alternative. The alternative now exists. Merchant discount rates, monthly terminal fees, and chargeback handling are all back in negotiation.

This is the payments reset. The Israeli small business is moving from card-first to rail-flexible — choosing the payment method per transaction, per customer, per margin, rather than accepting whatever the bank's terminal allows. The platforms that win the next decade in Israeli SMB payments will be the ones that make rail-flexibility invisible to the merchant.

Grow is one of them. Payoneer and Rapyd are two more, in their lanes. The category is open. The infrastructure is finally there.

For the first time, Israeli small businesses are choosing how money moves through their business — not simply accepting the infrastructure they inherited.

— The Olam Editorial Team