Until three weeks ago, merchants in the Gaza Strip were still accepting cash from residents, even though much of it consisted of worn-out banknotes. But they began gradually refusing cash more than 10 days ago, hardening their stance over the past four days and turning instead to banking apps and electronic wallets.
The shift has coincided with intensified Israeli targeting and killing of Hamas financial officials in recent weeks, including some involved in delivering salaries to the group’s members.
Hamas employees told Asharq Al-Awsat that most government workers and members of its military wing, the Al-Qassam Brigades, receive their salaries in cash.
Several Hamas sources said government employees receive part of their salaries roughly every 100 days, amounting to only about 1,000 shekels ($328), often in worn banknotes. Al-Qassam members, meanwhile, are paid every 40 to 50 days, receiving up to around 60 percent of their salaries and no less than approximately 1,200 shekels, generally in banknotes in good condition.
People dealing with Gaza’s markets told Asharq Al-Awsat that some merchants had recently begun accepting cash from individuals and transferring the equivalent electronically through apps and e-wallets in exchange for commissions of up to 10 percent.
The crisis marks a reversal from the peak years of the war that began in October 2023, when Gazans struggled to convert money held in electronic wallets into cash. Commissions started at 10 percent and at times reached 60 percent before electronic transactions became more widespread.
In August, an Israeli military spokeswoman warned Palestinians in Gaza against using a category of old shekel banknotes marked with the letter “B,” in a move aimed at economically squeezing Hamas.
What Do We Do With Worn Banknotes?
Ahmed al-Najjar, 39, an employee of the Hamas-run government in Gaza, angrily questioned what employees were supposed to do with the worn banknotes they received.
“How long will things remain this way?” he told Asharq Al-Awsat. “We are the ones paying the price with our lives, and we find no one standing with us — neither officials nor merchants — while others fight us in different ways to make huge profits and gains.”
Israel has barred cash from entering Gaza since Oct. 7, 2023, while banks suffered major thefts during the war. Israeli security authorities also sought to impose conditions on Gaza merchants after periodically allowing goods into the enclave, requiring payments through electronic applications in a move aimed at restricting Hamas.
Under the new circumstances, Hamas appears to be facing a serious cash shortage affecting its members and employees, coinciding with repeated Israeli killings of funding sources, money changers and prominent figures in its financial apparatus.
Hamas Warns Merchants
The Hamas-run police in Gaza issued a general directive warning shopkeepers and others against refusing cash. It stressed that they must accept different types of banknotes, old and new, provided they are not damaged, and threatened violators with strict legal measures.
A Hamas police official told Asharq Al-Awsat that the issue did not affect only government employees or Hamas members, but also families of orphans, war victims, wounded Palestinians and prisoners who receive financial assistance from various relief organizations but cannot find merchants willing to accept their cash.
Hamas-affiliated media in Gaza have also launched a campaign against banks operating under the Palestinian Monetary Authority in Ramallah, accusing them of encouraging merchants to switch exclusively to electronic payments and of closing hundreds of residents’ bank accounts. Some banks have repeatedly denied the allegations, reiterating days ago that no decisions had been made to close accounts.
The dispute has fueled an unprecedented social media campaign warning people against giving up cash in favor of banking apps and other electronic wallets. The campaign has included warnings that a new war between Iran and the United States could soon engulf the entire region again, potentially causing people to lose money held electronically.
An official banking source rejected those claims, telling Asharq Al-Awsat that funds held in banks would remain secure and that a shift toward electronic transactions was underway.
The source said banks were routinely updating customer information and identifying account holders’ activities amid concerns that some funds could be linked to money laundering. Banks, the source added, had instructions to facilitate Palestinians’ access to accounts as part of financial inclusion efforts taking place in both Gaza and the West Bank.
Israel recently killed Jabr Moqbel, the owner of a currency-exchange shop and a prominent Al-Qassam Brigades member in Gaza City, in a strike on a vehicle in Deir al-Balah. Mohammed Abu Alwan, a Hamas financial official, was killed in a strike in Khan Younis. A Palestinian Islamic Jihad financial official was seriously wounded Sunday in an attempted assassination west of Gaza City.
The Israeli military said in a recent statement that throughout the war it had killed 16 prominent financial operatives involved in transferring funds and financing Hamas’ military activities. It said the operatives had managed transfers worth more than $1 billion through a network of dozens of money changers in Türkiye and Gaza.
The military said it and the Shin Bet were focusing their efforts on damaging Hamas’ financing capabilities and preventing the rebuilding of its infrastructure and military capabilities.
