UAE rent payments: Cheques become less used as more tenants-landlords go direct debit

Dubai: More UAE consumers are ditching cheque payments when it comes to settling their rents with landlords, going by a new report issued by Visa on digital vs. cash spending trends.

Only 16% of rent payments were done using cash or cheque, according to the report, compared with 25% a year ago in the UAE. More landlords have switched over to direct debits from their tenants’ bank accounts, a move that has the full backing of the UAE Central Bank. (Plus, there is less cachet in UAE landlords insisting on cheques, with a bounced cheque payment no longer constituting a criminal offence.)

According to property market sources, landlords are seeing the ease of getting paid through direct debit. Once the familiarity comes in, there is less insistence on landlords’ part for the extra security offered by having tenants’ cheques in their hands.

“It was never enough for new Dubai residents wanting to pay through direct debits,” said a leasing agent. “Landlords had to be convinced too. That’s  clearly happening now.”  

Remittances see less of physical cash

Another area that has seen significant move towards digital payments is remittances, where using cash at currency exchange outlets is down to 27% of use cases against 40% last year. In the next 12 months, expect cash remittances to take another big cut as more UAE residents switch to online banking, fintechs, the payment platforms of e& uae and du pay to send their funds overseas. (Exchange houses in the UAE have been updating their online channels to take a sizeable share of these transactions, backing these with frequent special offers on fees, etc.)

Across the board, cash usage in the UAE is now at 23% of all transactions, according to the Visa findings. The process has accelerated as multiple government services make it a point of being accessed and payments transacted through digital means.

Once that becomes established, other parts of the payment landscape typically see consumer shifts to digital over cash.

Cash payments turn even less frequent  

Even then, ”the overall reliance on cash continues to remain low among cash users,” the payment solutions company says. “For 61% of respondents, only 1-2 out of their last 10 transactions were in cash.

“Only 3% of respondents claimed that all 10 out of their last 10 transactions were made with cash.”

The research was based on survey of 2,800 individuals across GCC markets. The questions related to overall ‘frequency of and motivations for cash usage’. It identified cash-heavy categories and proposes easier, more secure digital payment solutions for both consumers and local businesses. (The first edition of Visa’s ‘Where Cash Hides’ was done in 2023.)

Despite the obvious progress made in cutting down on cash usage, Visa still sees opportunities to go all in on digital payment adoption.

“Despite progress with digital payment adoption in the UAE, 23% of consumer transactions are still in cash,” said Salima Gutieva, Visa’s Vice-President and Country Manager for UAE.

“This represents an opportunity to further drive financial inclusion and digitize commerce in the country. We remain committed to supporting the UAE government’s cashless agenda – such as initiatives like Dubai's Cashless Strategy aiming for 90% digital transactions by 2026 and enabling local businesses in creating a better payment experience for everyone, everywhere in the UAE.”