Interview with Ummair Butt on Direct Debit System Platform and the Process for Digital Payment for UAE tenants and landlords

According to the official statistics by the Dubai Government, the Dubai population stands at 3.67+ Million as of March 2024. Out of which the total Expat population in UAE in 2024 stands at 9.06 Million. That means there is a huge demand for housing owning a property and renting out for the expats living in the UAE.

Generally, the traditional system of rental agreement between the landlords and Tenants has been on the paper document and providing PDC (Post dated Cheques) to landlords. Thanks to UAE government initiatives much of the paperwork has been made paperless but there are still the PDC, which now can be made digital. Direct Debit System is one of the ways by which this can be achieved.

Direct Debit System facilitates automatic rent deductions from tenants’ bank accounts under pre-agreed conditions, mirroring the functionality of PDCs. The technology eliminates the error-prone system of cheque acceptance, management and processing, and aligns seamlessly with the strategic directives of the UAE Central Bank and the UAE Government to transition towards modern payment methods.

Direct Debit System, the UAE’s first paperless direct debit marketplace, has partnered with Keyper, a leading venture capital-backed, technology-enabled property management platform, to launch the first digital rental payments platform accessible to all tenants and landlords in the UAE. The collaboration delivers a long-awaited solution to the traditional post-dated cheque (PDC) based transactions, enabling property owners to receive payments of rent digitally.

As part of the launch, Keyper is embedding its rent facilitation services (Rent Now Pay Later) into the rental process, which offers tenants the flexibility to make monthly digital payments while ensuring landlords can receive payments upfront. Enabled by the Direct Debit System, this shift towards digital payments is poised to significantly enhance the rental experience for both landlords and tenants, in addition to reducing the operational costs associated with rent payment processing. This initiative is especially beneficial for non-resident property investors in Dubai, providing them with a seamless avenue to lease their properties and receive payments digitally, anywhere in the world.

Ummair Butt, CEO of Direct Debit System

“This partnership is a testament to our commitment to innovation and our vision to simplify and enhance the rental process for landlords and tenants alike. Collaborating with Keyper allows us to expand our reach and contribute to the digital transformation of the rental market in the UAE, aligning it with other comparable global cities. Together, we are setting a new standard for the entire rental market, making the process more efficient, secure, and user-friendly.” 

Omar Abu Innab, Co-founder and CEO of Keyper

“We are thrilled to collaborate with Direct Debit System to introduce this revolutionary digital rent payment solution to the UAE. Cheques are a relic of the past. The need for our solution has been evident, as all stakeholders in the ecosystem are dissatisfied with cheques but lacked a viable alternative that preserved the functionality and the security of cheques without adding significant friction. The ‘bank agnosticism’ of Direct Debit System is a huge plus for us, as embedding direct debit into our service will help numerous landlords in the UAE who have multiple assignment of receivables and loans from banks against their properties.”  

However I still had some questions about the Direct Debit System (DDS), so I asked a few questions (Exclusive Interview) with Ummair Butt the CEO of Direct Debit System to provide more clarity about the DDS and how it benefits Landlords and tenants in the UAE

What are the advantages of the Direct Debit System compared to the current traditional approach?

Traditional methods are bulk post-dated cheques, the reason why this system existed was the lack of viable alternatives for landlords. With digital and legal alternatives of Cheques now available, it is much easier for landlords to switch to a new digital system whilst still retaining the peace of mind of the legal system but at a lower cost which means inevitably the rental offers will be for 12 months. Chequebooks these days are restricted to 10 leaves, so Direct Debit provides the ability and leverage to change we all desire and need for long periods.

What is the process for a Direct Debit System?

It’s an originator-driven system, what this means is that your landlord must be registered with Direct Debit Marketplace to accept payments from tenants. There is a mandatory KYC process to go through for landlords. And if all goes through even then we can not force landlords to give 12 direct debit payment plans. Ultimately the decision remains a mutual one between the Landlord and tenant.

Is there an App for the Landlords and Tenants on this digital platform?

Yes, there is an app for not just tenants but for all other payments too, it’s available on Google playstore and iOS and is only accessible through UAEPASS, which means it is only useful if you are UAE Citizen or resident, however as said above, it must be your payee who needs to register in the system and initiate the offer for payees.

This platform has to be adopted by the Landlords for the rent payment or can a Tenant use this platform directly and make the payment to the landlord?

No, the tenant can not initiate the payment as Direct Debit is not based on what we call push-based payment mechanisms which you see over 90% of payments are. Direct Debit is the digital alternative to cheques and cheques/DD are pull-based mechanisms. Hence, the tenant can not initiate or pay without prior agreement or we call it an “offer” to pay by Direct Debit.

What are the charges for using the DDS platform?

Two charges, one is the transaction fee which is AED7+VAT for both Credit Card Direct Debits and IBAN Direct Debits, regardless of the amounts. The second charge is a fixed charge for example from 1 Active DD payer to 1000 payers, its AED1000+VAT per month. These are very competitive rates and we hope that landlords will see value in it and therefore pass on by offering 12 easy-to-pay monthly DD offers.

Does this platform have UAE government and legal recognition?

Direct Debit like Cheque are decretal payment systems. Therefore at this very moment, in UAE Courts, cheques and Direct Debits carry equal legal weight. Direct Debit is also regulated and backed by the UAE Central Bank therefore this makes it the most trustworthy and reliable system in the country with peace of mind for users as there are plenty of protections available for payers.

In a scenario, If the rent payee has not paid rent or has no money in the assigned bank account, How does the digital rental platform assure the landlord of the payment? Is there an insurance support?

There is no Insurance support available for lack of funds scenario. It’s between the landlord and tenant to resolve. On the marketplace part, we give tools to make life easier. As a representation of payment three times, tenants’ inability to cancel Direct Debits unilaterally or closing down bank accounts without settling with the landlord are a few protections and tools we offer.

In many cases, where the tenant has not paid and absconded from the country, in PDC approach the Landlord can approach the police and court for support. In such a scenario, how does the DDS platform help?

At the moment there are no criminal proceedings with a bounced cheque of below AED200K value. So, if the tenant has absconded the country then the landlord can file a civil case whether the tenant was on Direct Debits or PDC. It’s effectively the same, Direct Debit is just digital.

In Post-dated Cheques mode, if the rentee doesn’t pay, the renter can approach the court for payment and the tenant has to pay AED100 for dishonoured cheques and maybe AED1000 as a penalty. What happens in the same scenario on a DDS platform?

Bounced Direct Debit charges are outside of the purview of the Direct Debit Marketplace platform. It is dependent on the Landlord or Merchant as to what they want to charge to their payer in such scenarios. There is no automatic charge levied by Marketplace Platform on bounced Direct Debits, It always makes sure all the scenarios the Direct Debit system remains free for payers.

In a scenario of PDC, the tenant can request the landlord to delay in putting in the cheque to the bank for a few days due to the lack of immediate funds in the account and sometimes the landlord agrees on the long-term relationship with the tenant. On the DDS platform, can this happen?

Yes, It is digitally possible just a day before the due date to delay the payment by mutual agreement between landlord and tenant.

Thank you, Mr Ummair Butt, for providing the information for the Direct Debit System

Readers, if you have any further questions on the Direct Debit System, please write back to editor@criticreviewer.com, we will try to provide the answer from the Direct Debit System.

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