World Bank Leads Efforts to Modernize Payment Systems to Strengthen Financial Resilience in West Bank and Gaza

The widespread destruction has left 93% of bank branches, 88% of microfinance institutions, and insurance companies in Gaza either damaged or destroyed.

Access to efficient financial services is vital for personal economic growth and national development, particularly during times of crisis. In the West Bank and Gaza, significant progress has been made over recent years to modernize payment systems and bolster financial infrastructure. However, since October 7, 2023, the financial system in Gaza has faced severe disruptions, with damage estimated at USD 14.2 million as of July 2024, according to a joint World Bank and United Nations Interim Damage Assessment.

The widespread destruction has left 93% of bank branches, 88% of microfinance institutions, and insurance companies in Gaza either damaged or destroyed. Out of 94 ATMs, only three remain operational, and the sole payment service provider (PSP) branch has been partially destroyed. These disruptions have severely hindered access to basic goods, including food and medicines, and impeded private-sector recovery efforts necessary for job creation and economic stability. Additionally, restrictions on freedom of movement across the West Bank have further exacerbated financial access challenges.

Progress in Modernizing Payments Infrastructure

The World Bank has played a pivotal role in advancing financial systems in West Bank and Gaza by partnering with international development organizations and the Palestine Monetary Authority (PMA). Key initiatives include collaborations with the German Corporation for International Cooperation (GIZ) on the West Bank and Gaza Digital Finance Project (2021-2024), and the Micro, Small, and Medium Enterprise (MSME) Technical Assistance Facility for the Middle East and North Africa (2022-2025).

To strengthen economic stability, the European Union is supporting the Palestinian Economy and Resilience Program (2024-2026), focusing on enhancing the financial sector’s accessibility and sustainability.

The World Bank’s support for National Payment Systems (NPS) reform has been critical, resulting in the implementation of the Real-Time Gross Settlement (RTGS) system, locally known as the ‘Buraq’ system, which has improved payment processing speed and efficiency. To further bolster the payment ecosystem, new regulations for e-money and national payment laws have been established to enhance security, foster innovation, and ensure compliance with international Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) standards.

Notable achievements include:

Launch of iBuraq: The Fast Payment System (FPS) improving transaction speed.

QR Code Standards: Establishing quick-response codes for efficient payments.

E-Sadad: A National Bill Presentment and Settlement System connecting service providers, banks, and e-payment platforms for seamless bill payments.

Oversight Policy Framework: Completed in April 2023, the framework enhances PMA’s oversight of digital payment systems, risk management, and governance, strengthening system stability.

Cybersecurity: Development of supervisory tools and frameworks to bolster IT governance, cyber risk management, and business continuity during times of crisis.

Digital Services: A Lifeline During Crisis

The current crisis has highlighted the importance of digital financial services as a lifeline for both individuals and businesses. Humanitarian agencies have increasingly partnered with payment service providers (PSPs) to deliver cash assistance via e-wallets to Gazans in recent weeks, demonstrating the resilience of digital infrastructure during emergencies. In the West Bank, where freedom of movement remains restricted, digital payments have enabled the continuation of essential services and transactions.

Recovery and Future Focus

As the region looks to recover, the focus must shift toward rebuilding financial infrastructure and expanding digital financial services to ensure greater resilience in the face of future disruptions. The World Bank will continue to support the PMA and local regulators in advancing:

Fast Payment Systems (FPS): Enhancing payment efficiency and accessibility.

e-KYC Solutions: Enabling electronic verification to simplify access to financial services.

QR Code Innovations: Developing new use cases to facilitate cashless transactions.

Direct Debit Solutions: Exploring digital methods to streamline recurring payments and address immediate crisis needs.

Building a Resilient Financial Future

The World Bank’s sustained support has laid the foundation for a more inclusive, secure, and modern financial system in West Bank and Gaza. Moving forward, efforts to rebuild and expand digital payment infrastructure will play a critical role in stabilizing the economy, empowering communities, and supporting humanitarian efforts.

While the damage to Gaza’s financial sector is significant, the advancement of digital payments serves as a powerful tool for recovery, ensuring financial access even during crises and fostering long-term economic resilience for the people of West Bank and Gaza.