Kathmandu— Residents of Gaza are grappling with an acute shortage of usable cash, dubbed a ‘cash famine,’ due to Israeli restrictions and the devastating impact of recent military operations on the territory’s banking infrastructure. Since October 7, 2023, limited access to physical currency combined with damaged bank branches and ATMs has crippled daily commerce, leaving many Palestinians reliant on increasingly unstable electronic payment methods. Individuals who have lost identification in the conflict face further obstacles accessing funds, while even those with accounts struggle with unreliable internet connections and merchant distrust.

Banking Infrastructure Devastated

The Palestine Monetary Authority reports that Israeli attacks have destroyed over 50 bank branches and numerous cash machines across Gaza. Significant amounts of cash remain inaccessible, trapped within damaged or destroyed vaults. While some branches reopened after the October 2025 ceasefire, services were largely limited to administrative tasks, failing to address the urgent need for new liquidity. Palestinians report difficulties opening new accounts with replacement identification documents issued post-2023, effectively excluding thousands from the electronic banking system.

Dependence on Unreliable Digital Payments

With cash scarce, everyday transactions have become increasingly complex and fraught with difficulty. Many merchants refuse to accept worn banknotes, leaving individuals like Firas Zaqloul struggling to complete even basic purchases after his home—and identification—were destroyed in the conflict. Israa Najm, a 23-year-old student, often waits for hours while her mother transfers funds electronically, as her own replacement ID is not accepted by banks. The reliance on digital payments also creates distrust between buyers and sellers.

Connectivity Complicates Transactions

The collapse of Gaza’s communications infrastructure further exacerbates the problem. Many merchants now prefer SMS confirmations from mobile phone transfers due to unreliable internet connections required for banking apps. Mohammed Awida, a 22-year-old nut seller, describes shopping as an ‘operation,’ requiring careful planning and ensuring access to multiple electronic payment methods. The need for reliable connectivity has even led to the emergence of informal commercial hubs around businesses offering free Wi-Fi.

Reshaping Commerce in Gaza

At locations like Bahloul Junction, street vendors gather near establishments with free internet access to facilitate transactions. Abdul Hadi Abu Shaaban, a 14-year-old bread seller, relies on customers transferring funds to his father’s account and showing him proof of payment, as he doesn't accept worn cash or have the means to provide change. Najwa Kahil, a 45-year-old woman buying food, struggles with using payment apps and often requires her son’s assistance, describing the process as humiliating.

The situation in Gaza remains dire, with residents continuing to face significant challenges accessing essential goods due to the ongoing liquidity crisis. The reliance on unstable digital payments highlights the urgent need for improved banking infrastructure and access to cash.

(With inputs from Al Jazeera)

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Originally published on abcnews.com.np.