As the currency disappears, inside the world of “cash brokers” in Gaza: “We lose almost half of our money because we can use it.”

With almost every bank branch and ATM becoming inoperable, people rely on an unlimited network of powerful cash brokers to make money for their daily expenses. Fees for these transactions have skyrocketed to around 40%.

“This is why people are crying blood,” said Ayman al-Dadu, a school principal living in Gaza. “It suffocates us and makes us starve.”

At the time of Surge in inflationWith high unemployment and lower savings, the scarcity of cash has increased the economic pressure on families.

Available cash has even lost some of its sheen. Palestinians use Shekel, the Israeli currency, for most transactions. However, merchants are increasingly reluctant to accept the contested bill as Israel no longer supplies territory with newly printed bank memos.

There are several underlying causes for Gaza’s punishing cash crunch, experts say.

To reduce the ability to buy Hamas weapons and pay fighter jets, Israel allowed cash to enter Gaza at the start of the war. At about the same time, many wealthy families in Gaza retracted money from the banks and fled the territory. And with growing fears about Gaza’s financial system, foreign companies have sold their goods to the territory and demanded cash payments.

As money supply in Gaza fell and civilian despair increased, the committee of cash brokers (about 5% at the start of the war) rose sharply.

Those who need cash will transfer the money electronically to the broker, and then a small portion of the amount is given to the invoice. While many brokers openly promote their services, others are more secretive. Some grocery stores and retailers have begun exchanging cash for their customers.

“If you need $60, you’ll need to transfer $100,” said Mohammed Basheer Al-Farra, who lives in South Gaza after evacuating from Khan Younis. “This is the only way we can buy essentials like flour and sugar. We lose almost half of our money because we can use it.”

Inflation in Gaza rose 230% in 2024, according to the World Bank. It fell slightly during the ceasefire that began in January, but shot again after Israel retreated from the ceasefire in March.

Cash touches every aspect of Gaza’s life

According to the World Bank, about 80% of Gaza people were unemployed at the end of 2024, and that figure is likely to be high now. Those who work are paid primarily through direct deposits to their bank accounts.

But “When you want to buy vegetables, food, water or medicine, you need to use cash if you want to transport it or if you need a blanket or something like that,” said Al-Dahdouh.

Shahid Ajjour’s family lives from savings for two years after the pharmacy and another business they owned were ruined by the war.

“We had to sell everything just to get cash,” said Ajjour, who sold the gold to buy flour and canned food. A family of eight spends what is worth $12 per day on flour. Before the war, the cost was less than $4.

Sugar is very expensive, and it costs between $80 and $100 (£2.2) per kilogram, several people said. Before the war, the cost was less than $2.

Petrol is about $25 per liter, or about $95 per gallon, and if you pay a lower cash price, it’s about $95 per gallon.

Invoices are worn and unusable

Gaza bills are being tattered after 21 months of war.

Money is very fragile, it feels like it will melt into your hands, said Mohammed al-Awini, who lives in a tent camp in southern Gaza.

Small business owners said they are under pressure from their customers to seek undamaged cash as their suppliers are requesting untouched invoices from them.

Thaeir Suhwayl, a flour merchant at Deir Al-Balah, said his suppliers recently requested that he pay only in an all-new 200 shekels ($60) bank note. Most civilians often pay him with a note of 20 shekels ($6) that is in poor condition.

On a recent visit to the market, Ajjour transferred the shekel equivalent to a shekel to a cash broker, receiving about $50 in return. However, when she tried to buy some household items from the merchant, the bill was not in good condition, so she was turned away.

“So your 50 dollars are worth zero in the end,” she said.

This issue has caused Gaza’s new business: money repairs. Repairing old bank notes costs 3-10 shekels ($1-3). However, even cash repaired by tape or other means can be denied.

People are at the mercy of cash brokers

After most banks were closed early in the war, people with high cash reserves suddenly had great power.

“People have their mercy,” said Mahmoud Axel, who was kicked out of his home in southern Gaza. “No one can stop them.”

Daria Arazzeze, a financial and accounting expert at Western University of Scotland, said the war makes it impossible to regulate market prices and exchange rates. “We can’t physically monitor what’s going on,” Arazze said.

A year ago, Palestinian monetary authorities, the equivalent of Gaza and the West Bank’s central bank, sought to ease the crisis by introducing a digital payment system known as Iburaq. According to the World Bank, it attracted 500,000 users, or a quarter of the population, but was ultimately undermined by merchants claiming cash.

Israel sought to increase financial pressure on Hamas earlier this year by closing its distribution of humanitarian aid.

Experts said it is unclear whether cash broker activities will benefit Hamas, as some Israeli analysts argue.

Omar Shabaan, director of Palchink, Strategic Research, a Gaza-based think tank, said the war made it even more difficult to determine who is behind all kinds of economic activity on the territory.

“It’s a dark place right now. I don’t know who’s bringing the cigarettes to Gaza,” he said. “It’s like the mafia.”

These same deep traders probably run cash brokerages and are selling basic groceries, he said. “They will benefit from imposing these committees,” he said.

When families run out of cash, they are forced to resort to humanitarian assistance.

Al Fara said that was what prompted him to start looking for food at the Aid Distribution Center. There, it is common for Palestinians to surge onto the other for a bag of flour and a box of pasta.

“This is the only way I can support my family,” he said.

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Kullab was reported from Jerusalem.