Credit card processing for business: how it works and what it costs
Credit card processing for business: who takes part in a transaction, what fee a small business pays (1.07% per the Bank of Israel, 2026), when the money arrives and what to check in the agreement.
Written with AI help and fact-checked.
Card processing is how a card or phone payment becomes money in the business's bank account. To take cards you need an agreement with a processing company (acquirer) and a card terminal. The business pays a fee on every transaction. In Q2 2026 small businesses paid an average fee of about 1.07% (KupaLi's calculation from Bank of Israel table J040).
Who takes part in a transaction
| Who | What they do |
|---|---|
| The customer | Pays by card or phone (Apple Pay, Google Pay). |
| The terminal | Reads the card and sends the transaction for approval. |
| Shva (שב״א) | The national system that routes card transactions in Israel for approval. |
| The issuer | The company or bank that issued the customer's card. Approves or declines. |
| The acquirer | The company the business has an agreement with. Pays the business and deducts a fee. |
The big acquirers in Israel are Isracard, Cal and Max. A few more companies have an acquiring licence from the Bank of Israel.
What happens in a transaction
- The customer taps or inserts a card.
- The terminal sends the transaction through Shva.
- The issuer checks the card is valid and has credit available, and approves.
- The terminal gets an approval number and prints or shows it.
- The terminal transmits the transactions, and the acquirer pays out per the agreement.
(Simplified.)
What card processing costs
Average fee by business size, Q2 2026 (KupaLi's calculation from Bank of Israel table J040):
| Business size (card turnover per quarter) | Average fee |
|---|---|
| Small, up to ₪500,000 | 1.07% |
| Medium, ₪500,000 to ₪5 million | 0.82% |
| Large, over ₪5 million | 0.61% |
| All businesses | 0.71% |
In Q1 2026 small businesses paid 1.12% on average.
In shekels: a business selling ₪50,000 a month on cards at 1.07% pays about ₪535 a month in fees. Every 0.1% you negotiate off is worth ₪50 a month, ₪600 a year.
The interchange fee is the part the acquirer passes to the issuer. The Bank of Israel set it: 0.5% on credit cards and 0.25% on debit cards, since January 2023. According to the Bank of Israel, this is the floor for the fee you pay.
When the money reaches your account
- Debit card: the acquirer pays the business within three business days (Bank of Israel Directive 472).
- Regular credit card: per your agreement with the acquirer. Some acquirers offer faster payout, sometimes for an extra fee.
- Installment transaction: the money comes in every month, one installment at a time.
What to check in a processing agreement
- The fee percentage, and whether debit, foreign cards and installments have a different fee.
- Payout dates: when the money comes in, and what it costs to get it sooner.
- Terminal fees: purchase, rental or monthly subscription.
- Commitment period and exit penalty.
- Connection to the POS: can the terminal connect to your POS software?
Turnover affects the fee. Get offers from at least two acquirers.
Security: what the business needs to know
- Since the end of 2024, only EMV transactions (chip or tap) are processed in Israel, per the Bank of Israel. A new terminal must also support tap.
- Tap without a PIN: up to ₪300 (as of November 2026). Above that, insert the card and enter the PIN. On a phone, approval happens on the customer's device.
- Never store the PIN or security code (the three digits on the back of the card), and never write down a full card number. The approved terminal handles them.
Processing and the POS: two ways to work
| Separate terminal | Integrated terminal (pinpad) | |
|---|---|---|
| Entering the amount | Twice: in the POS and on the terminal | Once, in the POS |
| Amount errors | Possible | Almost none |
| End-of-day reconciliation | Manual | Automatic |
| Cost | None, you usually have one already | An extra device to buy |
→ Pinpad: what it is and how to connect it to the POS · Cards without internet · Cash register with cards: keep the full picture
How it works in KupaLi
In KupaLi you choose how to take cards:
- On the terminal you already have: keep your current acquirer, and mark the payment as card in the register.
- On a pinpad connected to the register (₪1,500 + VAT): add products to the cart, tap "Card", and the amount goes to the pinpad automatically. The customer pays, and the approval comes back to the register.
Fees stay under your own agreement with the processing company. → Try 14 days free · The POS system guide
More questions
Can I take cards on an iPhone without a terminal?
Not right now. According to Apple's site, Tap to Pay on iPhone isn't available in Israel (November 2026).
Do I need to switch acquirers when I switch POS?
Not necessarily. In KupaLi you can keep your current terminal and acquirer, or move to a pinpad connected to the register.
What else do people ask?
What processing fee does a small business pay?
Small businesses paid about 1.07% on average in Q2 2026, calculated from Bank of Israel data. Your fee depends on your agreement.
Is the fee lower on debit?
The interchange fee on debit is 0.25%, half of credit (0.5%), since January 2023. Debit payments arrive within three business days.
What's the difference between an acquirer and Shva?
The acquirer is the company you have an agreement with, and it pays you. Shva is the national system that routes the transaction for approval.
How long does the money take to arrive?
On debit, up to three business days. On a regular credit card, per your agreement with the acquirer.
Can I accept phone payments?
Yes. A terminal that supports tap accepts Apple Pay and Google Pay, both available in Israel since 2021.