Draft (Hebrew)

The Banking Supervision Department is
continuing to advance the application of the advanced EMV standard in the
merchant acquiring market for payment cards, and both new and existing merchants
should prepare for it.  EMV is an
accepted global standard for securing payment card transactions based on use of
a “smart card”.  Adoption of the standard
will contribute to:

·      The promotion of
in the payments field, including mobile payments;

·    Strengthening
in the field of payment card issuance and acquiring by removing
a barrier to the entry of new players from Israel and abroad;

·    Reducing the risks of
counterfeiting and misuse
of payment cards by upgrading the security
mechanisms, including entering a personal identification number (PIN) at the
time of payment.

International organizations in the payment
card field (Visa and MasterCard), as well as the Bank of Israel, expect that
the conversion of the Israeli market to the advanced payment standard will be
advanced and completed, and that Israel will meet the standard that is
currently common in Europe and is being implemented in the US.  The transition will affect merchants, which
will be required to replace existing payment terminals with terminals that
support the standard, so that they will be able to provide customers with an
advanced and secure payment experience. 


In recent years, the Banking Supervision
Department has issued several guidelines regarding the adoption of the EMV
standard for entities dealing with the issuance and acquiring of payment cards
(Proper Conduct of Banking Business Directives 470 and 472).  The Banking Supervision Department is guiding
the process through a designated implementation forum that includes the
international credit card schemes (Visa and MasterCard), the Israeli credit card
companies, terminal suppliers and the Small and Medium Business Agency, among
others.  This forum monitors progress in
adopting the standard, and discusses solutions for the removal of barriers
facing parties involved in the implementation and ideas to encourage the


As part of the implementation process, the
banking Supervision Department is today publishing a draft revision of the
Circular from the Supervisor of Banks from May 1, 2016.  The revision takes into account the fact that
the supply of point-of-sale (POS) terminals that meet the standard remains
limited, and enables greater flexibility for merchants currently in the
implementation process.  The main changes
are as follows:

·      As a rule, as of August
1, 2017, new terminals (at both new and existing merchants) will be connected
only to the new SHVA system that supports EMV transactions (“Ashrait EMV”)

·     However, taking into
account the needs of merchants, and in view of the complexity of bringing new
terminals into the market, new terminals will be able to connect to the old
system, which does not support the EMV standard (“Ashrait 96”) in the following

o   When there is no terminal in the market that is prepared for
working with the new system and which meets the needs of the merchant. (The
list of available solutions for each type of terminal can be viewed on the SHVA
company’s website.)

o   When the yearly acquiring volume of the merchant does not exceed
NIS 60,000 (micro-merchant).  In such a
case, the period in which the merchant will be able to connect a new terminal
that does not meet the standard has been extended to December 31, 2018.

·     In order to help merchants
select terminals, the SHVA company has been instructed to publish a list of
terminal models that are prepared for working with the new system, divided by
type, on its website.

·    In order to incentivize
the players in the market to implement the EMV standard,
including the
existing merchants that currently use terminals that do not meet the standard,
a liability shift mechanism has been set out in the directives, which
sets out that in a case of payment through a smart payment card (with a chip)
at a merchant where there is no EMV terminal, in the event of fraudulent misuse
of the card, the acquirer is responsible for returning the charge amount
resulting from misuse, and it is permitted to shift the liability to the merchant.

With the objective of providing
terminal manufacturers and merchants a sufficient amount of time to prepare for
the implementation of the standard, the start of the liability shift mechanism
has been delayed to January 1, 2018.
Following that date, a merchant that does not support transactions with
the EMV standard and continues to work with magnetic strip cards will be
exposed to fraud damages.