Key Facts for Israel
- Primary real-time rails: ZAHAV, MASAV, Ashrait.
- Typical settlement times: MASAV settles in 5 to 7 seconds, while ZAHAV settles within minutes.
- Common limits: Varies by institution.
What “real-time payments” means in Israel
In Israel, “instant payments” are defined as fund transfers available 24/7, where the money is immediately accessible to the beneficiary. This contrasts with traditional methods like checks or bank transfers where settlement is delayed. The scope is comprehensive, covering both large-value, urgent transactions settled through the ZAHAV system and retail payments—including P2P, business, and government transactions—processed via the MASAV Faster Payments service. While a specific legal definition is not codified, the system operates on the principle of immediate and irrevocable credit, ensuring funds are final upon receipt (industry norm).
The Bank of Israel serves as the lead regulator and operates the high-value ZAHAV system. Retail instant payments are operated by MASAV (Bank Settlement Center), which acts as the primary subsidiary clearing house. Other licensed payment institutions, however, are supervised by the Capital Markets, Insurance and Savings Authority. To align with global practices, Israel’s instant payment infrastructure is being developed in line with the ISO 20022 messaging standard, while the ZAHAV system also interfaces with banks and clearinghouses using the SWIFT network.
Israel is actively aligning its payments infrastructure with leading global economies through the adoption of international standards and advanced functionalities.
Payment Rail Overview
ZAHAV
Launched in July 2007, ZAHAV is Israel's Real-Time Gross Settlement (RTGS) system for large-value and urgent payments. It provides final and reliable settlement for shekel payments by processing each transaction individually and immediately as it is received. The system operates during the banking business day, using the SWIFT network and IBAN standards to execute transfers.
- Real-time gross settlement: Each payment is settled individually without being offset against other payments, and all transactions are final and irrevocable upon execution.
- High security: The system uses the SWIFT interface and requires the International Bank Account Number (IBAN) for all transfers, which minimizes routing errors and fraud.
- Designed for large value: While there is no official minimum transaction amount, ZAHAV is primarily intended for high-value and time-sensitive payments.
Pros
- Immediacy and finality eliminate counterparty risk for high-value transactions.
- High security is maintained through established international standards.
Cons
- Associated costs make it less efficient for smaller, everyday retail payments.
- Operating hours are limited to the standard banking business day.
MASAV Faster Payments
Operated by the Bank Settlement Center (MASAV), this service provides a platform for immediate retail credit transfers. Funds are typically credited to a beneficiary's account within 5 to 7 seconds, making the payment final and instantly usable. The system is expanding from person-to-person transfers to include merchant and government payments, aligning with the ISO 20022 standard.
- Near-instant settlement: Beneficiaries receive funds in their accounts within seconds, offering an experience similar to a cash transaction.
- 24/7 availability: The system operates around the clock, allowing for payments to be sent and received at any time on any day.
- Expanding functionality: The service is growing to support Request to Pay (R2P) solutions, merchant point-of-sale transactions, and government payments.
Pros
- Extremely fast settlement is ideal for retail and P2P payments.
- Payments are irrevocable, providing certainty and immediate fund access for beneficiaries.
Cons
- Its expansion into business and government use cases is still in progress.
- It is not designed for the very large-value corporate payments that ZAHAV handles.
Limits, Fees, and SLAs
- Operating Hours: Instant retail payments are designed for 24/7 availability. The ZAHAV system, however, follows set business hours.
Compliance and Risk
KYC/KYB & AML
Israel mandates a strict AML/KYC framework for all financial entities. Firms must perform thorough customer diligence, verifying identities, identifying beneficial owners, and screening against global sanctions lists. Licensed payment institutions are supervised by the Capital Markets, Insurance and Savings Authority.
Fraud Controls
Fraud prevention relies on both system-level security and modern tools. Payment rails like ZAHAV use SWIFT and IBAN standards for secure transfers, while processors offer advanced 3D Secure, tokenization, and AI-driven detection to safeguard transactions against unauthorized activity.
Recordkeeping & Audits
Regulatory compliance demands meticulous recordkeeping of all customer and transaction data. Licensed payment institutions are subject to regular financial reporting obligations to the authorities, ensuring transparency and accountability, though specific statutory audit requirements are not publicly detailed.
Lightning Network Integration as a Solution
The Lightning Network is a second-layer protocol built on Bitcoin that processes transactions off-chain through payment channels. This design allows for faster and cheaper payments. While domestic RTP rails like MASAV offer instant settlement within Israel, the Lightning Network can act as a global bridge, extending real-time payment capabilities to international transactions where local systems are limited. It provides a borderless settlement layer for immediate, cross-border value transfer.
Lightning transactions settle nearly instantly, rivaling the speed of MASAV's retail payments. However, its primary advantage is economic efficiency and global scope. With fees often just fractions of a cent, it makes micropayments practical. Unlike domestic-focused RTP systems, the Lightning Network operates as a borderless infrastructure, facilitating immediate, low-cost payments to anyone with an internet connection, regardless of their location or local banking access.
- Cross-Border Complexity: It removes intermediaries and high fees from international payments, allowing for direct, instant settlement across borders without currency conversion delays.
- Scalability and Cost Barriers: By processing transactions off-chain, it supports a massive volume of payments at a fraction of the cost of on-chain transactions, making micropayments economically viable.
- Limited Market Access: The network provides a payment gateway to regions with underdeveloped financial infrastructure, opening new markets for businesses by connecting them to underbanked populations globally.
As a global, programmable, and open network, the Lightning Network presents a powerful alternative for the future of money movement.
B2B Enterprise Use Cases
- Supplier Payments – Pay international invoices instantly, with funds settling directly in the supplier’s digital wallet.
Business value: Eliminates cross-border payment friction and strengthens supply chain liquidity. - Merchant Settlement – E-commerce platforms and retailers receive customer payments immediately, bypassing multi-day card network settlement holds.
Business value: Provides instant access to sales revenue, dramatically improving daily cash flow. - Treasury Optimization – Move corporate funds between global accounts in real-time to manage liquidity and respond to market changes.
Business value: Reduces idle capital and offers precise control over global cash positions. - Global Payroll – Execute instant salary and fee payments to employees and freelancers anywhere in the world.
Business value: Simplifies paying a distributed workforce and offers superior payment flexibility. - Creator Economy Payouts – Platforms can send micropayments to content creators globally for user engagement or tips.
Business value: Supports new monetization models with low-cost, high-volume global transactions.
Cross-Border Transactions and Remittances to Israel
Executing real-time payments across borders is fundamentally challenging due to intense regulatory scrutiny and fragmented infrastructure. Reaching Israel involves complex rail bridging—connecting global payment networks to domestic systems like MASAV—and navigating inefficient foreign exchange (FX) paths that add cost and delay. Israel’s strict AML and KYC requirements introduce significant operational hurdles, slowing down financial flows that are expected to be immediate. This friction makes true, instantaneous cross-border settlement a difficult objective to achieve through legacy systems.
- Israel–Palestine: This financial corridor is critical for economic stability, facilitating shekel-denominated payments for salaries and services. Transactions depend on correspondent banking relationships and government waivers, which highlights the political sensitivity of these financial flows.
- Israel–United States: A major corridor for B2B enterprise payments, venture capital funding, and personal remittances. Transactions traditionally move through bank wires but are increasingly processed by global payment firms that offer more efficient currency conversion and settlement.
- Israel–Europe: Driven by strong trade and a growing tech sector, this corridor supports B2B commerce and a high volume of digital remittances. The entry of licensed fintechs is increasing competition and providing businesses with more direct, lower-cost payment options.
The Lightning Network provides a direct path for value, using Bitcoin as a universal settlement asset. This bypasses traditional banking friction, facilitating instant, near-zero-fee international payments and opening the door to truly global, real-time money movement for all.
How Lightspark Makes Integration Easy
Lightspark helps fintechs, digital banks, wallets, and exchanges build on the Lightning Network with enterprise-grade infrastructure. We abstract away the operational complexities, managing dynamic liquidity, optimizing payment routing, and providing a robust compliance framework so you can focus on your core product. Our comprehensive developer tooling is designed for rapid implementation, allowing you to offer your customers sub-second settlement globally without the heavy lifting. If you're ready to expand your payment capabilities and access a truly global, open network for money movement, it's time to connect. Talk to our team to get started.
Sources and Further Reading
- https://www.boi.org.il/en/communication-and-publications/press-releases/the-bank-of-israel-is-continuing-to-advance-instant-payments-in-israel-and-has-instructed-participants-to-prepare-for-receiving-payment-requests-r2p-by-the-end-of-2023/ - Bank of Israel instant payments.
- https://www.finofo.com/blog/zahav-and-masav-faster-payments-a-comprehensive-guide - Guide to ZAHAV, MASAV payments.
- https://www.lightspark.com/contact - Contact the Lightspark sales team.
- https://www.lightspark.com/knowledge/how-the-lightning-network-is-transforming-bitcoin - Lightning Network transforms Bitcoin payments.
- https://www.lightspark.com/knowledge/is-crypto-legal-in-israel - Israel's cryptocurrency legal framework overview.
- https://www.lightspark.com/knowledge/what-does-the-lightning-network-do - Explains the Lightning Network's function.
- https://www.lightspark.com/news/insights/what-are-lightning-payments - Overview of Lightning Network payments.
- https://www.reuters.com/world/middle-east/israel-extends-cooperation-between-israeli-palestinian-banks-official-says-2024-06-30/ - Israel-Palestine banking cooperation extended.
