Israel's Payment Infrastructure: A Practitioner's Guide to Zahav, Masav, and Shva

Israel has built a compact but modern payment infrastructure supervised by the Bank of Israel (BOI). The system handles a sophisticated economy with a strong technology sector, yet its clearing and settlement architecture often receives less international attention than its fintech ecosystem. This guide breaks down the three core components - and the recent changes that matter.

Zahav - Real-Time Gross Settlement

Zahav (Hebrew for "gold") is Israel's RTGS system, launched in July 2007 and operated by the Bank of Israel. It provides real-time, final, and irrevocable settlement of shekel payments in central bank money.

Operating hours: Regular business days: 07:45 - 18:45 (Israel time, UTC+2/+3) Short business days (Fridays and holiday eves): 07:45 - 14:00

Settlement model: Pure gross settlement - each payment is processed individually without netting or batching. The system debits the sender's account and credits the recipient's account at the Bank of Israel simultaneously.

Participants: Commercial banks, foreign bank branches operating in Israel, Israel Post Bank, CLS Bank (for FX settlement legs), and clearing houses. Nonbank entities have been eligible to participate since the BOI opened access criteria.

Connection to other systems: Zahav interfaces with the SWIFT network and receives multilateral net settlement instructions from Masav, the Paper-Based Clearing House, and TASE (Tel Aviv Stock Exchange) clearing houses during predefined settlement windows.

ISO 20022 migration: Completed in June 2025. The Bank of Israel announced the transition aligned Israel with the EU, UK, and Canada. Governor Amir Yaron stated the move "places Israel at the global forefront of innovation" in payments messaging. The BOI's Payment and Settlement Systems Department is examining whether to mandate ISO 20022 across other domestic payment systems as well.

Like most RTGS systems globally, Zahav handles relatively few individual payments by count but processes a substantial proportion of total payment value - typically over 90% in comparable jurisdictions.

Masav - Automated Clearing House

Masav (Bank Settlement Center) is Israel's ACH system and has operated since 1982. It is a banking corporation owned by five major banks: Bank Leumi, Bank Hapoalim, Discount Bank, Mizrahi-Tefahot, and First International Bank.

What it clears: Direct credits: Salary payments, supplier disbursements, government transfers Direct debits: Standing orders, utility bill collections, authorised debits Faster Payments: Masav also operates a real-time transfer service for retail payments

In 2020, ACH wire transfers through Masav accounted for 51% of Israel's total payment value, split between direct credits (42%) and direct debits (9%). The system reports an average availability level of 99.999%.

Settlement: Masav's net positions settle through Zahav in predefined windows, following the standard RTGS-as-backbone model used globally.

Access for non-banks: Organisations can participate in Masav through a sponsoring bank participant that manages their settlement account and takes responsibility for their activity. Organisations may use the system for both direct credits (such as wages) and direct debits (such as authorised account debits).

Shva - Card and ATM Switching

Shva (Automatic Bank Services) operates Israel's card payment infrastructure and nationwide ATM network. It provides card examination, approval routing, balance enquiries, and stand-in response services.

Shva handles the switching layer that connects Israeli card issuers with acquirers and merchants. All major international card schemes (Visa, Mastercard) route domestic Israeli transactions through the Shva switch.

Paper-Based Clearing House

The Bank of Israel also operates a Paper-Based Clearing House for cheques and physical payment instruments. While declining in volume, as in most developed economies, it remains operational for legacy payment flows.

Recent Developments

Fintech access expansion (January 2026): The Bank of Israel expanded the identification code used by nonbank corporations to connect to payment systems from two digits to three digits. This seemingly technical change is significant - it dramatically increases the number of nonbank entities that can connect directly, rather than routing through a bank intermediary. The BOI stated it expects to publish implementation timetables during 2026.

ISO 20022 consultation: The BOI is examining the need to mandate ISO 20022 across Masav, Shva, and other payment systems that have not yet integrated the standard, with a view to harmonising messaging across the entire domestic infrastructure.

What Practitioners Should Know

For cross-border payments: Zahav's ISO 20022 migration means Israeli correspondent banking flows now use structured messaging consistent with SWIFT CBPR+ standards. This reduces translation friction for international banks processing shekel payments.

For fintech companies: The widening of direct access (three-digit identification codes) and the BOI's policy of allowing nonbank entities into Zahav signal a regulatory posture that is actively opening infrastructure. Israel's Payment Services Law, modelled partly on PSD2, reinforces this direction.

For treasury teams: Israel's payment infrastructure operates on a compressed schedule on Fridays and holiday eves (closing at 14:00). Combined with the time zone (UTC+2/+3), this requires careful planning for cross-border payment routing, particularly for European and US counterparties operating in different business hours.

Sources: Bank of Israel - Zahav RTGS System; Bank of Israel - Payment Systems Overview; Bank of Israel - ISO 20022 Transition Announcement (June 2025); Bank of Israel - Designated Controlled Payment Systems; Bank of Israel - Participation of Nonbank Entities in Zahav.