Payment and settlement systems are a core element of the economy. They allow the financial markets to function smoothly and individuals, firms and the government to receive payments and to pay for goods and services. The Palestine Monetary Authority recognized the importance of modernization and oversight of the National Payments System (NPS) as part of the wider monetary authority responsibility of ensuring financial stability and expanding financial inclusion. The payments and settlement systems of Palestine dating back to 2009 were incomplete and weak, characterized by incomplete legal and regulatory frameworks, absence of automated clearing and settlement systems, and lack of a dedicated oversight agency. The PMA sought technical assistance from the FIRST Initiative, and have since adopted a National Payment System (NPS) reform. FIRST worked with the World Bank’s Payment Systems Development Group (PSDG) to provide technical assistance on legal and regulatory reforms; and develop operational procedures and policies for the Real Time Gross Settlement (RTGS) and Automated Clearing House (ACH) systems.
The Payment System Law was approved in November 2012. The Payment Systems Oversight Unit was then established in February 2013 to define legal and legislative frameworks, plan the policies and strategies of the PMA in managing risks in payment systems, expand payment services, provide a competitive environment for payment services, and coordinate with the banking system and payment providers. The ATM/POS National Switch was recently launched in May 2015, which will help the West Bank and Gaza to shift from a cash-based society to one that uses modern electronic payment methods.