It was recently announced that the UAE Central Bank has approved of a direct debit marketplace making it easier for both merchants and customers to make their monthly payments.
Before we look at this any further we need to know, what is direct debit?
When you allow for direct debit it means that you give a company or whomever you need to pay permission to take funds from your bank account on an agreed upon date every month. Therefore all payments that you normally have to manually oversee every month such as rent or school fees can now be done automatically.
This means that as a customer you no longer need to keep record of and stress about when the next payment is due or deal with any potential late fees if you do happen to forget. As a merchant you are alleviated from the stress of knowing whether or not you will be paid on time and you will no longer have to pay those expensive percentages on credit card payments.
The UAEDDS (UAE Direct Debit System) regulates and authorizes the Direct Debit System FZ LLC to run and aggregate services for UAEDDS. They have chosen to make it a paperless process therefore if you want to set it up it is all done online within the comfort of your own home or even at the office! In terms of safety the Central Bank itself regulates the process and ensures that anyone who is approved to take funds via direct debit is heavily scrutinized. Additionally it can only be accessed through the UAE Pass app which safeguards you from identity theft.
In terms of costs, Direct Debit charges AED 5 + VAT per transaction and have an approximate yearly charge of AED 6,000, depending on the nature of your business and size. There is no minimum or maximum amount that can be paid for via direct debit however it is recommended that you have at least 100 or more payments per month to make it worth it. As the merchant it will be a cost that you will incur as you will simply invite your payers to either accept or decline the recurring payments.
If you would like to start the process then you should have a few KYC (Know Your Customer) documents ready (passport, visa, EID, proof of residence, FATCA self-declaration form) as these are sent to the Central Bank so that you can be issued with an OIC (Originator Identification Code) which is a unique number assigned to you. As a business owner you should also have documents such as trade license, POA (Power of Attorney) and MOA (Memorandum of Agreement) at the ready.
Once you have passed all the relevant security checks and have obtained your OIC, you will receive training which will allow you to be able to set up your own parameters within the system and you will be able to navigate the system on your own.
Overall, direct debit makes life easier for both the payer and the payee and as the UAE and the world continues to move to a more technologically reliant place, this is a great first step in terms of payments!
To find out more about this exciting news or to set up direct debit you can visit the following website.
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Image from Bayut.
