“There are no functioning banks, no ATMs, and almost no way for people to access cash without paying high fees.”
For over a year, the humanitarian crisis caused by Israel’s military campaign and siege of the Gaza Strip has been compounded by the extreme difficulty of accessing cash in the enclave, intertwining the struggle for survival with the challenge of obtaining the physical bills required to pay for essential goods.
The Israeli shekel is the currency in Gaza, and Israel has not allowed any new cash to enter the territory since before the war. Amid widespread destruction and societal collapse, banks and ATMs are unable to function to allow people to withdraw money from their accounts.
Instead, to access cash, even people who have funds in their accounts or receive cash assistance from NGOs, crowdfunded donations, or salaries have to navigate an opaque system of money brokers who take substantial cuts of 20% to 40% in exchange for bills.
The situation improved slightly during the 19 January to 18 March ceasefire as the Hamas-affiliated governing authorities partially re-emerged and instructed money brokers to limit their commission rate to 5%. As a result, cash became extremely scarce due to brokers refusing to distribute it at the lower fee, and people shifted towards using digital payments. When the ceasefire collapsed, the rate to obtain bills shot back up as high as 40%.
“The fact is that cash became a commodity, so it’s kind of taxed,” Nil Eyuboglu, a cash and voucher assistance adviser for Save the Children, told The New Humanitarian.
The struggle to access cash may be a less visible challenge than the threat posed by ongoing bombardment, Israeli ground offensives, and the absence of food and other essential supplies caused by the total blockade Israel has imposed since 2 March. But civilians and aid workers say the difficulty of obtaining bills is one more important factor people have to contend with in their quest for survival.
With no new cash entering Gaza, it’s not just a matter of paying money to have physical bills. It has also become increasingly difficult to find cash that is in a condition merchants will accept – and being a “commodity” means the price for physical cash continues to fluctuate.
Banks and some NGOs have tried to encourage the use of digital forms of payment as an alternative, but with limited access to electricity and the internet due to Israel’s destruction of the power grid and telecommunications networks, these only offer a partial solution.
Afaf Talab Jalo is a 48-year-old single mother of five living in Gaza City. Her husband was killed in an Israeli airstrike in 2014. Four months ago, she began receiving cash assistance from an international NGO.
“First, we receive the money via a code,” she said, explaining how the process works. “I then transfer the funds to my e-wallet or bank account.”
“When I want to withdraw cash through brokers, I have to pay additional commission fees,” Jalo continued. “My bank application allows me to make purchases. But buying through the app is usually more expensive than getting items from street vendors. Plus, not everything can be purchased with a card. For example, [payment for] transportation cannot be given with any app.”
Since the imposition of the complete ban on goods and commodities entering Gaza and the end of the ceasefire, the situation has been deteriorating.
“We just received the fresh data… [that] shows prices are increasing, certain perishable products are disappearing. It’s a no-brainer,” said Artur Ayvazov, UNICEF’s chief of social policy in Palestine.
“The ceasefire brought improvement to the conditions of markets, prices, and [cash] liquidity. Now all these gains are vanishing fast,” he added.
No banks and no ATMs
Individuals and aid workers who spoke to The New Humanitarian largely attribute the liquidity crisis to the fact that no new cash has entered Gaza since before the Hamas attacks into Israel on 7 October 2023 and the beginning of Israel’s retaliatory war.
The Palestinian Monetary Authority (PMA), which functions as the central bank in the Israeli-occupied Palestinian territories, would not confirm when in 2023 the last transfer took place but said entering new cash into Gaza would require permits from Israel and a “calm security situation on the ground”.
In response to questions about the entry of cash into Gaza and the issuing of permits, COGAT, the Israeli Ministry of Defence unit tasked with implementing civilian policy in the occupied territories, said it was not the relevant authority but did not respond to further questions about who the relevant authority is.
Prior to the current war, the PMA said there were 56 bank branches in Gaza, most of which have now suffered varying degrees of damage. Airwars, a civilian harm monitoring organisation, has documented at least six instances of airstrikes in the vicinity of Gaza’s banks. According to the World Bank, 98% of Gaza’s banking infrastructure has been affected by the war, and only two out of 94 ATMs in the enclave remained semi-functional as of February.
“Even for those who receive money from abroad, getting it in cash is a struggle.”
During the ceasefire, the PMA was working with banks in Gaza to gradually resume some services – although not cash withdrawals. Eleven bank branches in central and northern Gaza did resume partial operations, but those have since shut down again.
In addition to ongoing hostilities, challenges cited by the PMA to resuming banking services include physical damage to branches and ATMs, cash shortages, the accumulation of damaged banknotes, lack of fuel to run branches, communication difficulties, and the inability to bring new banking equipment into Gaza.
“There are no functioning banks, no ATMs, and almost no way for people to access cash without paying high fees,” 23-year-old Safaa Abualatta, who lives in northern Gaza’s al-Shati refugee camp, told The New Humanitarian via text message. “Even for those who receive money from abroad, getting it in cash is a struggle.”
Abualatta also highlighted security concerns that come with depositing money in a bank account. Her father recently had $1,295 stolen from his account through a series of online purchases – despite having his bank card with him and never sharing his information. His bank was unable to help him recover the stolen funds.
“This shows how unsafe and unreliable the banking system in Gaza has become,” she said. “People are already struggling to access money, and now they are also at risk of losing what little they have.”
A new profession
The constant circulation of old bills means banknotes in Gaza now suffer from increasing wear and tear, making them less likely to be accepted as a form of payment.
“A new profession appeared in Gaza after October 7,” joked Aziz, 40, in an email, referring to individuals who repair worn-out bills that might otherwise be rejected or exchanged for less than their original value due to their condition.
Aziz, who did not want to provide his full name, said he recently paid five shekels to have a 50-shekel bill repaired for him in central Gaza.
Ahmed al-Jayeh, 29, is one of these repairers. He started his new profession after realising people were in need of someone to restore their paper money. Al-Jayeh, who used to work as a quality manager at a food products factory, said he had a passion for crafts from a young age. He now puts that interest to use wielding simple tools – a craft knife, glue, cotton swabs, and paper – to repair bills.
For two or three shekels a note, al-Jayeh breathes life back into old bills by meticulously patching or gluing them together. “The situation demanded it,” he said.
People were initially reluctant to use banknotes that had evidently been repaired, but attitudes have changed with the ever-deteriorating liquidity situation. “Now, everyone comes to me for repairs,” he said, from his makeshift workshop in Deir al-Balah market.
Tattered and fragile banknotes have become commonplace, but it’s often hard to actually use them. “If the banknote is in good condition, it is still used in transactions,” explained Omar Hamad, 28, a pharmacist in Beit Hanoun in northern Gaza who crowdfunds to make clothes for local children. “Otherwise, we face great difficulty in exchanging it.”
Abdul Aleem Rabie Mohsen, a 53-year-retired father of seven, faces the same challenge with merchants often refusing his old or worn-out bills. The 10-shekel coin, he said, is refused outright. This matched up with testimony from other people in Gaza and information collected by NGOs that suggested the 10-shekel coin has a tendency to rust and is often suspected of being counterfeit. As a result, it has effectively vanished from circulation.
Digital payments
Digital forms of payment have been introduced by banks and humanitarian organisations as alternatives to the physical exchange of cash, but these too face obstacles.
Aid organisations that shared information with The New Humanitarian and UNICEF cited a common set of challenges: lack of internet connectivity; limited access to electricity to charge cell phones; activation fees; and a lack of knowledge about how digital payments work.
On top of those issues, there are also only a limited amount of goods available in the market, and those are being sold at extremely high prices as they become increasingly scarce.
More people started using digital payment methods during the ceasefire as conditions improved slightly and more merchants began accepting them, but that progress has reversed. Since hostilities resumed, “many shops and supermarkets have stopped dealing with electronic cash transfers”, said Aziz.
Bigger supermarkets and grocery stores that accept digital payments have all but run out of stock. And the few small stores and vendors that still have items to sell are only accepting cash.
“Israel needs to let the PMA undertake new cash missions to top up Gaza’s dwindling cash.”
Mohsen, the retiree, has long been suffering from a toothache and is yet to find a dentist who will accept electronic payment.
“I use my Bank of Palestine account to make digital payments, but it is unreliable. The service depends on internet availability, which is unstable due to the war,” said Abualatta, in al-Shati refugee camp. “If a store or vendor doesn’t accept digital payments, I simply cannot buy anything unless I have cash.”
The people The New Humanitarian spoke to also said merchants charge higher prices to those using digital payments than those paying with cash. Aziz said he pays around an additional 15% for items purchased through electronic banking applications. “Even clothes,” he said. “I bought a training suit, and the seller told me to pay cash 150 shekels and pay via electronic wallet 185 shekels.”
Despite the obstacles, both UNICEF and Save the Children told The New Humanitarian they have had success with delivering cash assistance to people using e-wallets. Humanitarian organisations also emphasised that cash assistance is critical at a time when physical aid is at near-constant risk of being blocked from entering or looted.
“Cash has been the only modality that has been implemented at scale and without any stop since the beginning of the war,” said Eyuboglu, from Save the Children, crediting the aid sector’s unified response through the Gaza cash working group.
As long as the war continues, with Israel blocking the entry of goods and aid, the cash liquidity crisis will continue as well.
“Israel needs to let the PMA undertake new cash missions to top up Gaza’s dwindling cash,” said Chiara Genovese, a cash advisor at Mercy Corps. “Without new cash injections, and collection of old notes there, and without functional ATMs and bank offices, we will see a collapse of the current economy, even in times of ceasefire.”
“We don’t expect improvement unless basic banking functions are resumed in the Gaza Strip,” said Ayvazov from UNICEF, adding, it is “hard to imagine” having the basic safety and public order needed to operate banks in an active combat zone.
Rosa Rahimi reported from London. Ghada Abdulfattah reported from Gaza City and Deir al-Balah, Gaza. Edited by Eric Reidy.