UAE online transfer payments
A lot of the regular payments in the UAE will soon go into direct debit mode, eschewing cheques. Rents will be one of them. Image Credit: Shutterstock

Dubai: A Dubai fintech Direct Debit Marketplace will soon go live with its portal that would allow organisations to directly debit recurring payments due from their subscribers. The process would allow collections of rent and payment of school fees, insurance and gym memberships to be paid this way.

The platform also comes ‘bank agnostic’, which means that its users’ relationship with their bankers will not be affected. All the payments done through the portal will be integrated with – and regulated by – the UAE Central Bank.

The imminent launch of services come as more payments in the UAE will look at options other than cheques. For instance, rental payments should soon go into direct debit mode. "Writing four cheques for rents or three for school fees are common in UAE,” said Ummair Butt, founder and CEO of Direct Debit System. “Our app provides residents and citizens with a safe, legal alternative to make all their recurring payments in one place, ideally on a monthly basis.

Monthly payments and avoiding quarterly- or biannual bulk payments means Direct Debit Marketplace can help over 96 per cent of monthly salaried people to stay in control of their finances and out of debt.

- Ummair Butt - Founder and CEO of Direct Debit System

“This is especially important knowing that rents and school fees account for more than 50 per cent of their salaries. Our mission is to encourage a culture of monthly direct debit payments for all big or small ticket items at very low cost to merchants and free of charge for payers.

“It is hugely cost-effective for merchants who currently accept payments through credit cards or cheques. For example, a typical credit card payment would mean merchants pay somewhere between 1-3 per cent of the transaction value. We offer a fixed fee, regardless of the credit card or bank account, and there is no need to warehouse and process cheques."

Competing against banks on direct debit
But can’t banks provide the same services on direct debits?

“A majority of the time, the bank will charge Dh2 per transaction," said Ummair Butt of Direct Debit System "Wherever direct debit has been a success, you will see it is always been merchant-driven. It is legal payment and therefore must be collected on a due date by the merchant. Control of payments thus needs to remain with the merchant.

"It is also impossible for all banks to have integrations with all merchants. When you as payer pays a certain merchant, the merchant sees an amount in his/her corporate account with no possibilities of tracing where the money has come from.

“ Imagine thousands paying through direct debit from their own bank account the same amount of subscription fees. The merchant’s accounts team will have headache tracing the payers.”