As the ESAF study on electronic banking and financial inclusion written by the Oxford Policy Management group1indicates, increases in the use of electronic payments will lead to greater efficiencies and should encourage a large percentage of the population to utilize financial services in general. However, current infrastructure of the financial sector in Palestine remains rather traditional, with banks continuing to rely heavily on their branch networks although the first Point of Sales (PoS) were fielded in 1999. PMA guidelines and regulations have encouraged a growth in the deployment of Automated Teller Machines (ATMs) and one bank has committed significant resources to the roll out of a network of PoS devices as well as the related software.
Although access to bank accounts is widespread in the West Bank compared to countries of similar wealth and development, significant numbers of people in Palestine continue to rely on cash for savings and transactions. The long term benefits to the country of reducing the dependence on cash encourage an interest by the authorities and the banks in understanding what it would take to increase the usage of electronic alternatives. Universal access to mobile phones may also provide an opportunity for the future.
This paper addresses the issue of the apparent reluctance of both merchants and consumers in Palestine to replace the use of cash with electronic payment instruments. The emphasis in this paper is on payment instruments which can be used in the physical world such as card and mobile although a growth in internet payments would of course also reduce the national dependence on cash.