New direct debit system to be rolled out in the UAE

UAE

Phasing out cheque method

The UAE Central Bank have confirmed that they will begin implementation of the service from June 15 in a bid to make payments to banks and financial institutions and phase out the traditional cheque method.

Between June 5-14 roles and users for the UAE Direct Debit system (UAEDDS) would be defined, along with the registration of all lenders and credit card issuers. By June 15, all loans/finances advanced to individual customers will be using UAEDDS. By July 13, entities registered in UAEDDS can commence registration of all. From September 14, UAEDDS can be used to send and receive payments by customers of registered originators of the system.

The Direct Debit facility is designed to remove the requirement to sign several post-dated cheques to pay instalments upon obtaining a loan. Account holders will benefit from improving their financial management.

Sudhir Kumar Shetty, chief executive officer of the UAE Exchange welcomed the development of the Direct Debit system and said that it would give an undertaking to their lenders to debit their bank account on a payment date.

A SmartDebit  spokesperson from the Surrey-based firm commented: “The main benefit being reported is the eradication of the costly cheque payments, however Direct Debit provides much more than that. Further benefits are improved cash flow from knowing exactly when the funds will arrive in your bank account, saving time and money from not having to chase clients for payments and the security against fraudulent practices”, he continues, “A recent study revealed that electronic payment usage in the form of credit and debit cards has added approximately US$4.2 billion to the UAE economy. The introduction of Direct Debit will diversify the region’s payment methods as well as contributing towards economic growth.”

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