Four FinTech Products I Would Like To See Roll Out in Israel
Silicon Wadi is certainly one of the world’s great startup ecosystems.
But — despite its well-deserved reputation as a world center of innovation — it is a small market. For Israeli FinTech startups it cannot be used as a geography for passporting into the European Economic Area (EEA), and, for international FinTech providers, it infamous for imposing often burdensome regulations on companies thinking of setting up domestic operations.
Nevertheless, if those objections could be overcome, these are four products that I would love to see officially roll out in Israel.
Privacy.com: Per-Transaction Virtual Payment Cards
The Israel problem: US only.
A virtual credit card looks and functions like a physical credit card — except that you don’t receive a physical piece of plastic so you can’t use it as easily for Point of Sale (PoS) transactions.
I first became interested in the concept when I learned that I could avail of a virtual credit card that I could fund by transferring in Bitcoin — but spend as fiat, allowing me a quick means of achieving liquidity to cash in on the (then) rapid appreciation of the cryptocurrency.
Regrettably,card issuers began shutting down their Bitcoin-backed debit card operations before my card even arrived in the mail.
Privacy.com allows you to create multiple virtual credit cards per month — and tie them all to any US-based checking account.
Anyone who’s ever been burned by a disreputable online retailer should be able to immediately spot the value proposition.
Rather than hand over your credit card details to a merchant that you don’t trust, you can create a virtual card for that transaction only and: a) fund it periodically, only depositing enough to cover the value of your expected yearly transaction; b) cancel it, without affecting your ability to buy other goods and services on credit; c) not exposure your actual credit card credentials to anybody, who could sell the details on to third-party merchants.
Privacy.com even offers a free tier which allows you to maintain up to twelve cards per month.
If you upgrade to the Pro plan, you can create 36 such cards — which should be a comfortable number for most needs.
Although the comparison is very tangential, I’m a big fan of Cloudflare, which proxies web traffic through their service in order to obfuscate your actual server IP addresses and make it a lot harder for a would-be hacker to map our your network infrastructure in preparation for an attack.
It’s a rough analogy, but virtualization technologies which put a layer between third parties and your actual assets (whether credit cards or web servers) are great means of improving your security and fit in nicely with the general worldwide trend of decentralization and an erosion of societal trust.
Unfortunately this Reddit thread indicates that there are no alternatives — even in Europe.
I hope that changes soon.
Revolut: Free Currency Exchange
Israel problem (for TOS sticklers): Available for European Economic Area (EEA) residents only.
Israel’s national currency is the New Israeli Shekel (I typically denote it as NIS, as do many, although ILS is actually the official currency abbreviation as set down in the ISO standard).
As a minor world currency, this means that a sizable amount of one’s purchases (at least those that do not involve acquiring coffee or falafel) will involve foreign exchange — typically charged at your card issuer’s lousy buy rates.
By contrast, Revolut:
- Offers its users the interbank rate in over 150 world currencies.
- Covers £200 a month in international ATM withdrawals for free. This should certainly be enough for travelers and potentially even enough for expats using Revolut as their everyday card.
Friends have reported that it’s possible to obtain cards by sending them to an address you have in an EEA country — assuming you have a European passport to verify yourself with, of course.
But what can I say? I’m a straight shooter — and I think that keeping your money with a provider whose terms and conditions you are technically in violation of is not a prudent course of action (‘legacy residency’ is a defined construct in tax codes and does not mean visiting a country you once lived in once a year!)
Curve: A Frontend For Your Other Payment Cards (My Explanation)
Israel problem: Curve is currently available within the 31 European Economic Area (EEA) countries. Regrettably, this Area consists of the EU member states plus Iceland, Liechtenstein and Norway — and does not therefore include Israel.
Every now and again I come up with a “genius new business idea” that turns out to have been invented several months or years previously.
I generally take these as somewhat encouraging signs that I continue to have somewhat viable sparks of innovation swimming around my head — before then proceeding to bang said head against the table in frustration.
Last summer, I lost my credit card.
I would love to tell you that it had been years since the previous incident, but in reality it was about six months. Maybe my cognition was adversely impacted by the last time I realized that my “genius business idea” existed and banged my head off the table.
Having just been through the time-consuming ordeal of manually updating what seemed like a million online accounts, direct debits, Paypal, and other such inconveniences, I was dreading the experience.
Then, a flash of inspiration struck, and after spending all of five minutes on Google I dashed off the following email to my trusted business criticism advisory pool.
A few hours later I of course received:
Apparently over 600,000 people have signed up for the Curve payment card which — as my genius idea suggested — aggregates multiple payment cards and allows you to manage them through a mobile app.
The details of what Curve does don’t need repeating here, but it’s truly something that would open up possibilities for many olim who continue to maintain banking services in their country of origin.
Rich irony: Curve’s CEO, Shachar Bialick, is originally from Israel!
Better TransferWise: ILS -> * And Debit Card
I’m a massive fan of TransferWise and far prefer it to Payoneer’s clunky user interface, even though the latter is in fact based in Israel.
Their support is also fantastic and using its virtual / Borderless accounts truly inspires me to “think globally” when envisioning what clients, and currencies, I can work with.
I routinely take Eurozone payments through my virtual account in Germany (soon to be Belgium) and give ACH details to clients based in the US. For a very reasonable fee (that works out to be far cheaper than any exchange rate I would get), the money moves completely seamlessly through to my domestic account here in Israel in just a few business days — all without any intervention on my part.
Unfortunately, the service’s utility for Israelis consumers is diminished in two important respects:
- Transferwise does not support outbound (ILS to other world currency) transfers.You can send outbound transfers, but you’ll need to hold a balance of the currency first.
- The Transferwise Card (a debit Mastercard®) — which allows you to spend your Borderless account holdings directly — or receive low cost conversions if you don’t hold the currency — and receive £200 a month in complementary exchanges fees is not available in Israel yet.
Israel problem: The list of countries the Transferwise Borderless card is available can be found here.
It includes the EEA member states plus the US and some other anomalies (that are less anomalous when one considers they are major world finance centers).
The Times, However, Are Changing
I authored a few posts on my blog (and started an online petition!) about Amazon’s ‘entry’ to the Israeli market. (In reality, you have been able to buy from Amazon.com in Israel for years, but the shipping costs, in addition to Israel’s import restrictions, generally made it unaffordable to do so; the retail giant recently introduced a free shipping (above $49) offer. As a result, the postal service is collapsing!)
I hope that as more and more international companies continue to explore the Israeli market that the regulatory authorities will, in turn, make it easier and more enticing for them to do so.
Israel’s banking sector is notorious for levying extortionate fees on its customers — and credit card issuers offer marginal benefits compared to international franchisees.
If the disruption of the cellphone market and the revolution in flight ticket prices that the Open Skies Agreement heralded have taught us anything, it’s that even the most stifling of Israeli monopolies can be disrupted — if there’s a will to change them, that is.
Hopefully the consumer finance sector will be next in line.
This Medium post is a revised version of an article that was originally posted to https://www.danielrosehill.co.il.