DUBAI: Salaries will be credited to employee accounts much quicker with the roll-out of the UAE Funds Transfer System (FTS) on April 14, replacing the slower Swift system, said a banking industry expert.
"FTS is a huge step forward with quicker salary transfer being a key benefit for individuals," said Rajesh Mohan, Head of Banking and Finance, Unity Infotech, a Dubai-based banking software developer.
FTS, mandated by UAE Central Bank, works as a real-time gross settlement system. It is dovetailed with the International Bank Account Number (IBAN) adopted by the UAE in November 2011.
Meanwhile, banks have started notifying customers to start using the 23-digit IBAN starting with "AE" in applying for any dirham-denominated funds transfer within the country.
"Customers will definitely benefit with speed, and lower standardised fees," Imam Elias, member of the FTS project team with Noor Islamic Bank, told XPRESS. "Earlier, banks used to charge between Dh100 and Dh225 from customers who transfer funds within the UAE. Now it's been standardised to Dh25 with FTS. Some banks used to charge customers for payment of employee salaries, now the salaries will also be transferred for free through FTS."
But there's a catch: If the IBAN does not match as per the beneficiary's bank records, the beneficiary name and other details will not be validated and the transfer will be stalled, according to an Emirates NBD notice sent to customers.
Except for credit cards, all payments in dirhams within the UAE must use IBAN, the Central Bank said. And with exchange houses joining the FTS loop, customers will be able to move money within the UAE even beyond the banking hours, as long as they can find an open FTS-link exchange.
Unity's system is used by a dozen local banks and eight exchange houses. Mohan said over 20 money exchange houses are already part of FTS. "Any funds transfer transaction before 3pm will be processed the same day, but beyond that, it will be credited the next day."
With the much slower Swift system, it used to take two to three days for fund transfer transactions to be processed, as it was routed to servers outside the UAE.
"There are a lot of institutions, especially in the free zones, that are not on the Wages Protection System (WPS)," said Mohan. To avoid delays or rejection of fund transfers, bulk transactions must now use the IBAN prescribed by the FTS when the system kicks in from next week.
The Central Bank adopted IBAN in November 2011 to trace transactions using a 23-digit number system. It is used for remittances of salaries through UAE's WPS, which allowed the government to monitor private sector workers' wages since September 2009. Swift will be used for international fund transfers and non-dirham local transactions, the Central Bank said.