This article is the first in Realign for Palestine’s series The Future of Money in Palestine, which examines the monetary policy frameworks needed for Gaza’s reconstruction and seeks to provide a practical blueprint for establishing a financial system that Palestinians can trust.
The Gaza Strip faces an unprecedented challenge. Years of conflict, extensive infrastructure destruction, population displacement, and fragmented governance have severely disrupted economic activity and public services, including systems for managing population and identity data. In this environment, giving citizens and small businesses access to secure, regulated, and efficient financial transactions will be critical to supporting economic recovery and maintaining social stability.
A closed-loop digital financial system tailored to Gaza’s unique circumstances could help address these challenges. Rather than focusing on large-scale trade or conventional commercial banking infrastructure, such a system would focus on the everyday financial needs of individuals and small and medium enterprises (SMEs). It could support humanitarian aid distribution, commercial transactions, and broader economic revitalization through a secure digital ecosystem.
To achieve these goals, Gaza needs a new architecture for digital access and security, a new system for population and identification documentation, and the tools needed to meet the basic financial needs of individuals and the wide array of micro businesses and SMEs. Together, digital access, identification, and digital wallets and platforms could provide the foundation for a functional financial system.
Significant technical, legal, and operational challenges remain, yet carefully designed and innovative solutions can be developed through meaningful cooperation among stakeholders operating in and around Gaza.
Connectivity is key to Gaza’s financial future
Reliable connectivity is the foundation of any digital financial system. For Gaza, however, establishing that foundation presents a fundamental challenge: the territory has no sovereign internet connections. Financial autonomy and inclusion will therefore depend on access to reliable, secure, and Palestinian-operated digital infrastructure. This, in turn, requires addressing questions about who operates the internet, the infrastructure it relies on, and how it is secured.
The existing telecommunications infrastructure in Gaza is severely constrained. Local operators report that only a fraction of its pre-war cellular infrastructure remains operational, and even that fraction is largely limited to basic 2G connectivity. There are no fiber-optic networks or reliable broadband access, restricting bandwidth, range, and the reliability of digital applications.
Building a fiber-optic network will require substantial time and investment. But regional connectivity initiatives, such as the India-Middle East-Europe Economic Corridor, could provide a framework for exploring such projects.
But developing new internet infrastructure will require more than laying cables. Questions of privacy, access, ownership, and energy will be equally important. Who will own and control the infrastructure? Who will be permitted to access it, and under what conditions? And where will the electricity needed to operate these structures come from? Answering these questions will be essential to establishing independent and sustainable digital infrastructure capable of supporting Gaza’s future development.
Before October 2023, Gaza’s electricity came from three main sources: the Israeli grid, Egypt, and its sole electricity generation station, funded by the Palestinian Authority (PA). Excluding the Israeli grid, which supplied the former industrial zone in the north, these sources provided between six and eight hours of electricity per day‚ with diesel generators providing additional power when needed.
The situation has since deteriorated further. The sole electricity generation station is still in operation, but the remaining diesel generators depend on fuel delivered under the European Union (EU) Mission for the Support of Palestinian Police and Rule of Law. Until a functioning electricity grid can be rebuilt and supplied by the remaining station and Israeli supplies, generators will remain the primary source of electricity, along with large batteries charged by solar panels.
Discussions with stakeholders indicate that recent approvals have been granted and initial deployment of 4G telecommunications infrastructure has begun. These 4G towers could represent an important step forward. If implemented successfully, they could provide greatly improved mobile connectivity and significantly enhance the usability of digital identity and payment applications. Satellite-based internet services offer potential alternatives, but regulatory, licensing, and affordability concerns limit their practicality.
The challenges associated with satellite-based or fiber-optic internet remain too great for widespread implementation in the short or medium term. Thus, the most reliable near-term solution for internet infrastructure is likely to be the expansion of telecommunications towers and the transition to 4G from the current 2G network, much of which has already been destroyed.
The Israeli government maintains control over internet access in Gaza. A negotiated agreement among US, Israeli, and Palestinian telecommunications providers could offer an alternative model. Under such an arrangement, Palestinian internet infrastructure would be managed by Palestinians, while relevant parties would ensure compliance with mutually agreed conditions for its use. Although such negotiations would be complex, reaching an agreement will be essential to ensuring durable, long-term, sovereign, and secure internet access for Gaza.
Digital finance starts with hardware
A truly digital financial ecosystem also requires widespread access to smartphones that support modern financial technologies, particularly near-field communication (NFC), which enables virtual payment cards, contactless transactions, and mobile point-of-sale solutions. While many apps serving the Gazan market have adapted by incorporating offline capabilities, the ideal scenario would allow residents to access financial services consistently through smartphones without relying on offline functionality.
While smartphones are already present in Gaza, reliable data on ownership rates and device capabilities remains limited. Prior to the war, 92 percent of Gazans had internet access at home, 58 percent owned a smartphone, and 69 percent had a cellphone. Although access has declined, estimates suggest that a substantial number of devices remain in circulation. Some estimates put the number of active devices at around 1.7 million, most of them smart devices. Yet many are outdated, damaged, or lack NFC functionality. In addition, restrictions on importing new devices and replacement parts have hindered technology renewal.
To accelerate access, inclusion, and overall adoption, policymakers and international donors should consider programs that provide NFC-enabled smartphones to households that lack suitable devices, with applications preloaded to connect residents to humanitarian programs and other essential resources.
Lower-tech alternatives—including Bluetooth Low Energy, smart cards linked to digital wallets, and tokenized SMS payments—could help bridge the gap in the near term. But these solutions are best viewed as interim measures rather than substitutes for a modern smartphone-based ecosystem with NFC capacities. Compared with the broader costs of economic reconstruction, investments in device access could deliver significant long-term benefits by enabling broader participation in a new digital economy.
Building a digital civil registry from fragmented records
The next foundational component of a trusted digital financial system is the ability to conduct “know your customer” (KYC) checks on individuals. And in the case of Gaza, this is perhaps the most complex part of the framework. Years of conflict, displacement, and damage to administrative records, combined with political disagreements between Palestinian parties—including discrepancies between Hamas and PA records—have created significant challenges in verifying identities and maintaining accurate population records. At the outset of the war on October 7, 2023, the Gazan population was estimated at 2.3 million according to PA records. Today, there are 5,000 open cases requesting identification, alongside 55,000 identification applications submitted over the past twenty years.
Some Gazans hold PA-issued population IDs and records synchronized with Israeli security databases. However, not all Gazans met the criteria for PA identity registration, in part because all PA identity applications were subject to Israeli review. As a result, it remains unclear how many individuals were registered only in Hamas records, how many of Hamas’s internal documents remain intact, how many Gazans who previously held IDs still have access to them, or how accurate records of births and deaths from natural causes are. It is also unclear how reliably information reported by hospitals in Gaza has been transmitted to the PA Ministry of Health and Ministry of Interior.
Given that there is currently no uniform identification system, residents seeking to register will inevitably present different types and degrees of documentation. The system should therefore establish multiple pathways for registration, allowing individuals to be verified and enrolled based on the information and documentation available to them.
One potential tool that combines personal and financial data is a Visa or Mastercard ID card, which can be issued in either digital or physical form. The card could also serve both as a personal identification credential and a means of conducting financial transactions. A similar model is already used for university student IDs at multiple institutions in the West Bank, combining student information and access rights with the ability to receive and spend money. Similar models are used in the US, where the card displays a student’s name, photo, student ID number, and validity period, while also incorporating EMV chip technology and contactless tap-to-pay capabilities.
Other interim solutions could include expanding iDplus, a digital financial identity platform approved by the Palestinian Monetary Authority (PMA) that allows citizens to create a digital financial identity linked to banking apps and authenticate transactions through biometric verification, including facial recognition. However, centralizing identity information and banking information under the PMA could raise concerns about surveillance, data access, and institutional accountability. These concerns would need to be carefully addressed when designing a system that relies on a central authority such as the PMA.
Any digital financial system must incorporate robust KYC and anti-money laundering controls. These safeguards are essential for maintaining trust, ensuring regulatory compliance, and preventing misuse. Given the realities on the ground, a practical approach would be to categorize residents into four groups: individuals born before 2006, individuals born after 2006, those who have lost their documentation, and newborns and orphans. The year 2006 provides a potentially useful cutoff because it marks the rise of Hamas’s control in Gaza and the emergence of parallel systems of governance and record-keeping.
- Individuals born before 2006: This category includes those born before 2006, who generally possess Palestinian identification documents that can be validated through existing PA databases. Verification procedures for these individuals should be relatively straightforward, allowing digital identities to be issued with a high degree of confidence and in a relatively short timeframe.
- Individuals born after 2006: Many records for this group are incomplete or unavailable within existing databases. Verification could be achieved by reviewing available documentation and cross-referencing family records and other ancestral data maintained by government authorities. Upon successful review, individuals could receive provisional digital identities while additional verification is completed.
- Individuals who lost documentation: For those whose documents have been lost or destroyed, community-based verification mechanisms could be used. A process involving local community leaders, witnesses, and recognized neighborhood representatives could establish identity with reasonable confidence. These individuals may initially receive restricted digital identities that permit access to humanitarian aid and essential services until further documentation is obtained or biometric data can be collected and integrated.
- Newborns and orphans: Hospital records can serve as the foundation for newborn registration. For orphaned children, international organizations and social institutions should play an active role in identity verification, while taking into account local cultural and legal sensitivities.
While biometric data collection could provide a secure future approach to digital identification and a reliable source of baseline information, there are significant challenges to building trust and legitimacy around any new initiative that involves digitizing people’s information, given the sensitivities involved and the possibility of such data being weaponized. Some experts and institutions, including the World Bank, have therefore recommended avoiding biometric features.
The system should consequently allow individuals to register and access essential services without initially providing biometric data. Instead, biometric identification could be introduced at a later stage, once the system has demonstrated its reliability and public trust has been established.
A tiered path to financial inclusion
A tiered KYC framework could provide a practical channel to manage the uncertainty surrounding identity verification. Rather than requiring every individual to meet the same verification threshold before accessing financial services or humanitarian aid, users could be assigned one of three statuses: “pass,” “under review,” and “fail.”
These statuses could be managed either by a central authority or recorded through nodes on a decentralized ledger, with authorized entities issuing payment identity credentials. A decentralized system could reduce the risks associated with concentrating sensitive identity and financial information under a single entity, while also helping to address concerns about misuse, surveillance, or a lack of institutional accountability.
Individuals whose documentation is complete and who successfully pass all required checks would receive “pass” status, granting them full digital identity and wallet functionality. Those who have undergone preliminary verification but require additional checks could receive “under review” status and a provisional financial identity. This would allow them to access a defined range of services while additional verification is completed.
Meanwhile, a “fail” status would apply where available information is insufficient or inconsistent with the requirements for registration. Importantly, this status need not permanently exclude an individual from the system. It could instead trigger a pathway for additional documentation or further review, likely including the PA, Israeli authorities, and US oversight officials.
This tiered approach would strike a necessary balance between financial inclusion and security and regulatory requirements. It would not be perfect, but it could provide a practical starting point and operational framework for establishing trusted identification tools and expanding access to financial services. For Gaza’s recovery, the fundamental objective is clear: people must be able to establish verifiable identities that allow them to transact safely and securely.
Keeping Gaza’s data safe—and private
The implementation of a digital identity and financial ecosystem will generate substantial amounts of sensitive personal and financial data. Consequently, data governance and privacy protection must be treated as strategic priorities. Several issues require consideration, including where data is stored, how individual privacy is protected, who is granted access to the data, and how that access may be used.
The physical location of data storage is itself a critical security consideration. Storing sensitive data within Gaza could expose it to potential access by spoilers and other malicious actors, while storing it elsewhere could raise serious questions about sovereignty, control, and jurisdiction. A resilient architecture could combine secure local infrastructure with geographically distributed backup servers, ensuring that data—as in disaster recovery, for instance—can be recovered in the event of physical destruction or technical disruption. Regardless of where the data is stored, however, the security of systems physically located within Gaza will require particular attention.
Cybersecurity must be treated as a central component of this system rather than an afterthought, with data management and protection aligned with the highest international standards. Privacy presents an equally important challenge. The risks extend beyond the collection of biometric information to the broader question of who can access which data, under what circumstances, for what purposes, and with what oversight. Strong access controls, independent review, and transparent governance will be essential to preventing the system from becoming a tool for surveillance or misuse.
There have been various efforts to digitize national IDs in different contexts, and there are relevant lessons to be learned from the shortcomings of these programs. India’s Aadhaar biometric ID program, for instance, has been repeatedly targeted by hackers and has faced concerns over unauthorized access and the misuse of personal data, including the potential for fraud involving government benefits. Kenya has also faced challenges with its digital identification program, which has raised concerns about the protection and potential commercialization of citizens’ personal data.
Therefore, all data management practices should comply with internationally recognized cybersecurity, privacy, and operational standards. Transparent governance arrangements would help build trust among users, regulators, and international partners. Such standards should include adherence to global technical and management standards developed by the International Organization for Standardization (ISO)—including ISO/IEC 27001 and ISO/IEC 27018—as well as existing regulatory frameworks in the US and the EU, such as the EU General Data Protection Regulation and the Asia-Pacific Economic Cooperation Privacy Framework.
Other industry-specific standards, such as the Payment Card Industry Data Security Standard (PCI DSS), should also be considered, alongside the National Institute of Standards and Technology’s Cybersecurity Framework, which provides voluntary guidelines for managing cybersecurity risks and incorporating privacy into data systems. Any entity processing payment card data would need to comply with applicable PCI DSS requirements and the rules established by the PCI Security Standards Council in order to participate.
The PMA could be a potential entity to manage and operationalize this process. Over the decades, it has developed a relatively neutral position as an interlocutor between Palestinian and Israeli financial and political actors. Across conversations with stakeholders, the PMA seems to be recognized by all relevant parties, including the PA, Israel, and the US.
However, the institution’s role would need to be addressed as part of longer-term negotiations, as the PMA is inherently a subdivision within the framework established under the Oslo Accords and the existing Palestinian Authority, whose political sovereignty over Gaza remains contested. A formal agreement would be needed to expand the PMA’s unique role and establish its long-term mandate to oversee Gaza’s financial system. Furthermore, while there is a strong argument to be made for using the PMA as a manager and operator of the data and digital identification process, several functions within this system could also be entrusted to private-sector actors.
How to move finance forward amid political deadlock
The political and security environment has left little room to address the macro-policy challenges confronting Gaza. Pervasive distrust, ongoing conflict, and competing political interests have created few incentives for the parties involved to reach new agreements or to advance recovery efforts. Yet this paralysis also leaves room for private-sector actors that retain the trust and support of the Israeli, Palestinian, and US governments.
These actors could take on several of the functions needed to establish a digital financial ecosystem without waiting for immediate changes to legislation or broader political agreements. Over time, more comprehensive regulatory frameworks could be developed collaboratively. In the meantime, entities that already meet stringent international regulatory and compliance standards could be permitted to operate under the existing licenses and frameworks.
The PMA could play a central role in this process. Its relatively neutral position could allow it to serve as an institutional bridge. One option would be to establish the PMA as an independent entity that does not formally represent the PA but instead serves the broader economic interests of the Palestinian population. This approach could ensure that its presence in Gaza’s financial activities does not imply recognition of PA sovereignty over Gaza, potentially alleviating Israeli concerns.
Furthermore, a joint committee comprising the PMA, the Coordinator of Government Activities in the Territories—the Israeli Ministry of Defense unit tasked with facilitating logistical coordination with the Gaza Strip—the Civil-Military Coordination Center, the Board of Peace, and other relevant US policy bodies could be convened. Such a committee would have decision-making authority over specific digital financial issues—and an initial phase could focus on engaging a trusted Palestinian private-sector operator licensed and monitored by Palestinian authorities, as well as by Israeli and other relevant stakeholders.
From digital infrastructure to economic agency
Though significant challenges persist, Gaza and the Palestinian people cannot wait for every political dispute to be resolved. Individuals, families, humanitarian organizations, and SMEs need financial infrastructure that allows them to establish digital identities, receive funds from domestic and international sources, make payments, protect their savings, and participate in legitimate economic activity. A secure digital ecosystem built around reliable connectivity, accessible devices, trusted digital IDs, interoperable wallets, and rigorous data protection could provide the foundation needed to meet these needs. These are not separate projects but interconnected components that must be integrated into policy to restore meaningful economic agency while satisfying legitimate security, regulatory, and compliance requirements.
While no technological framework can substitute for a political agreement, physical security, or effective governance, it can create pathways for cooperation when broader diplomacy remains stalled. A well-designed digital infrastructure for Gaza’s economic future would do more than simply facilitate payments. It could establish the foundations for transparent aid delivery, private-sector growth, lending, employment, financial inclusion, and the eventual reconstruction of accountable institutions. A secure and inclusive digital economy is a critical component of making reconstruction possible.
A plan that includes carefully governed pilot programs, trusted public-private partnerships, and joint oversight by Palestinian, Israeli, and US stakeholders could prioritize the rules governing identity verification, data access, cybersecurity, interoperability, dispute resolution, and accountability. Independent audits and measurable performance standards could be incorporated from the outset. The choice is ultimately between a fragmented digital economy vulnerable to insecurity and exploitation, and a comprehensive, regulated system designed to protect users and support long-term recovery.
Sami Abu Yousef is the chief executive officer of the Ramallah Investment Group.
Melanie Robbins is the deputy director of Realign for Palestine.
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The Realign For Palestine project at the Atlantic Council aims to amplify pragmatic voices who courageously advocate for Palestinian statehood and self-determination, unequivocally reject violence, terrorism, and extremism and acknowledge a two-nation solution, including Israel’s right to exist in safety. Decades of violent conflict have proven that all who support Palestinians must realign our words and actions to finally achieve lasting peace.
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Image: Palestinians rehabilitate and restore damaged and worn-out banknotes due to the halt in currency transfers from Israeli banks to Palestinian banks. Source: REUTERS/Majdi Fathi/NurPhoto.