The Dubai real estate industry has just reached another important milestone. Asteco, one of the leading property management service companies, announced that it has launched the Direct Debit System in the UAE for property payments. Post-dated cheques were the traditional rent payment method in the UAE. But now, tenants can pay rent by direct debit, simplifying the process for the parties involved.
This digital payment method is just one more way that new real estate technology has transformed the dynamics of the UAE property market. Bayut was in conversation with Asteco’s Managing Director, John Stevens. Watch as John breaks down the process of paying rent by direct debit in the UAE. And don’t miss as he discusses the benefits for both tenants and landlords, and how Asteco’s partners are simplifying the transactions.
WHAT IS THE DIRECT DEBIT SYSTEM? HOW DOES IT WORK FOR RENTAL PAYMENTS?
Launched in 2013, the DD System is a digital payment method introduced by the UAE Central Bank. Simply put, it’s a safe and convenient method to make regular payments, whether it’s fixed or variable amounts.
Now, Asteco is making waves by launching the direct debit service in the real estate sector, allowing tenants to pay rent by DD in the UAE. Even today, writing post-dated rent cheques is a common practice in the UAE, which Asteco deems outdated in today’s digital world. John says that paying rent through direct debit is secure, efficient, and fully automated. More importantly, it allows tenants in the UAE to deposit payments into the landlord’s account on an agreed frequency – whether it’s on a quarterly or monthly basis.
Asteco has partnered with the National Bank of Fujairah and DD System FZ LLE to launch direct debit payments for rent. The digital payment method has been successfully integrated into Asteco’s property management software and has been met with approval from landlords.
HOW DO TENANTS AND LANDLORDS SIGN UP FOR DIRECT DEBIT PAYMENTS IN THE UAE?
Signing up for the direct debit payments for rent just requires tenants to sign a Direct Debit Authority document with Asteco as a one-time step
The first step requires the landlord to agree to use DD payments for rent on their properties in the UAE, with more doing so by the day. Then, instead of a post-dated cheque, the tenant signs a Direct Debit Authority (DDA) document with Asteco as a one-time step. This will register them with the UAE Central Bank and the National Bank of Fujairah.
Once it’s set up, tenants will then be able to pay rent through direct debit. Payments will be debited from the tenant’s current or savings account. Or even their credit card – on the agreed dates and frequency and deposited into the landlord’s account.
WHAT ARE THE BENEFITS TO PAY RENT BY DD IN THE UAE?
Tenants can now pay rent by direct debit, eliminating the need for post-dated cheques
Post-dated rent cheques are common in the UAE yet can create an issue for tenants. Having to pay with lesser frequency means taking out loans or saving up large amounts to meet rent obligations. In addition, DD payments for tenants in the UAE can ease their cash flow, since it requires smaller, more frequent payments. It’s also a much-needed relief for those who are new to the UAE or have an outstanding bank loan.
Landlords benefit from direct debit payments for rent, too. The smaller and more frequent payments mean landlords have the assurance of a stable income stream. It also helps landlords and developers meet banks’ repayment schedules. There’s already a growing trend for developers to offer monthly payment terms, among other schemes.
HOW SECURE IS PAYING RENT BY DIRECT DEBIT IN THE UAE?
John assures that the whole transaction is overseen by the highest levels in the financial industry when tenants pay rent by DD in the UAE. The DD System is a robust financial tool backed by the Central Bank of the UAE. Signing the DDA document with Asteco registers the tenant with the Central Bank as well. The alternative payment method is also well established in Europe, US, Brazil, and South Africa.
HOW ARE ASTECO’S PARTNERS FACILITATING THE PROCESS FOR DIRECT DEBIT PAYMENTS IN THE UAE?
However, each partner has brought something unique in the creation of direct debit payments in the UAE real estate industry, says John. Asteco, as a property management firm, has a portfolio of tenants and landlords. As the DD System is a banking tool, a partner in the financial sector was needed. This is where National Bank in Fujairah (NBF) comes in. The NBF has assisted in creating the DDA document and facilitating the payment process between the Central Bank and the transacting banks.
Finally, the DD System FZ LLE has innovated the tool that allows communication between all parties, allowing the creation of DD payments for rent. This final partner enables the integration of their software into Asteco’s property management system. This ensures a smooth process when creating the DD Authority document for tenants. It’s resulted in a seamless system allowing tenants to pay rent by DD, which is already operational and welcomed by landlords.