Payment Services: When Does Collecting Payments from Customers Require a License?

Do you collect payments from customers and pass them on to suppliers? Two positions issued by the Israel Securities Authority (ISA) staff, concerning Pango and the Hever club, illustrate why the underlying business model warrants closer examination. The question is not merely how long you hold the funds, but the capacity in which you act: an independent commercial party or a link in the payment chain. This distinction may directly affect licensing requirements.

1. Pango: Commercial Substance Is Key

Pango sought the ISA’s position that its “blue-and-white” curbside parking service does not require a license under the Regulation of Payment Services and Payment Initiation Law, 2023. Under the arrangement reviewed, users pay Pango for parking, and Pango pays the local authorities under its agreements with them.

The request relied on a “purchase and resale” model: independent contractual relationships with the supplier and the customer, under which the reseller does more than transfer funds. It is the payee in the customer transaction, is responsible for supplying the product or service, and must pay the supplier even if it has not collected payment from the customer.

The ISA staff concluded that the activity described did not require a license, based on its substantive alignment with the reseller model and the particular characteristics of municipal parking. Relevant considerations included Pango’s obligation to pay the local authorities regardless of collection, its status as the payee, its responsibility for registering parking sessions and providing compensation for related failures, and its operation of customer support.

The practical takeaway: An independent commercial structure may support a conclusion that no license is required, but the “reseller” label alone is insufficient. The staff’s position was limited to the activity and representations reviewed. It was not a blanket determination regarding Pango’s activities or payment collection on behalf of local authorities.

2. Hever: Even Holding Funds for One Day May Require a License

Hever operates a prepaid card scheme through Isracard, a regulated financial entity that performs most of the activity, including issuing the cards and holding the funds until they are used. Following use, the funds are transferred to Hever’s account, held for approximately one business day, and then transferred to the merchants.

The ISA Staff’s Position

The ISA staff concluded that receiving the funds and transferring them to merchants makes Hever a link in the payment chain, and that this activity constitutes payment acquiring requiring a license. The short holding period, internal controls, and performance of most of the activity by a regulated entity do not alter that conclusion.

Nevertheless, the staff stated that it would neither initiate nor take enforcement action in relation to the activity described until October 31, 2026, to allow the necessary adjustments to be completed. Significant weight was given to the steps Hever was already taking to eliminate the stage at which it holds the funds, alongside the limited consumer risk and short period of exposure.

The practical takeaway: Enforcement relief does not remove the licensing requirement. The relief granted to Hever was limited in time and scope. It does not exempt Hever from applicable consumer protection law or provide immunity against third-party claims.

3. What Should You Review Now?

The flow of funds: Who receives the customer’s money, where is it held, and to whom is it transferred? Even a limited stage in the process may require a license.
Contracts and actual operations: Who is the payee, who is responsible for the service, and who bears the risk of non-collection? In a reseller model, the agreements and business conduct should reflect the same allocation of roles.
Your own role: A business partner’s license does not necessarily cover the activities you perform. Each stage should be assessed separately, even where the regulated partner performs most of the activity.
Operational alternatives: Could you eliminate the stage at which you hold the funds and arrange for them to be transferred directly through a licensed payment service provider? The entire arrangement must be assessed; changing the destination account alone may not be sufficient.
Approaching the ISA: A request for a position on licensing requirements should be distinguished from a request for enforcement relief. An effective submission requires a complete factual account and, where relief is sought, a concrete implementation plan and timetable.

Summary

The two positions emphasize that the licensing assessment focuses on an entity’s substantive role in the payment arrangement, rather than merely the length of time it holds funds. This requires examining the flow of funds, contractual obligations, and allocation of responsibilities and risks, alongside how the activity operates in practice. It is also important to distinguish between activity that does not require a license and activity that requires a license but benefits from temporary enforcement relief, which does not alter its legal classification.

This memorandum is based on the ISA staff’s responses dated January 15, 2026, concerning Pango, and September 10, 2026, concerning Hever, rather than on the original requests. It is intended for general information only and does not replace a case-specific assessment of the applicable law and activity or a review of subsequent developments.