For a fast-paced country with booming cities such as Dubai and Abu Dhabi, news of the UAE Central Bank’s move to a direct debit banking system is long overdue.
The emirate is renowned for the catchphrase “work hard, play hard”. Such a busy lifestyle comes with the inevitability that some things get overlooked or plain forgotten. For many, that is likely to be paying dreaded bills.
Under the current system - whether it’s water, power, credit card payments, insurance premiums or mobile phones - it’s up to the consumer to remember to pay up on time.
While it’s obviously a matter of personal responsibility, it also lends itself to defaults as people inadvertently overlook a payment’s due date.
The process of going to a bank in person or logging into internet banking may seem easy enough but in the hectic daily cycle of life it’s not always convenient.
The current system means post-dated cheques are frequently used as guarantees by businesses and individuals. But, any error in the use of this is serious, given that under UAE law it is a criminal offence – rather than merely a civil crime – for a cheque to bounce, causing some to be jailed.
Direct debit banking is not new. In fact, it is commonplace around the world.
Setting up payments for telecommunications, mortgages, personal loans, power and water bills, credit card payments and insurance premiums is not only convenient for consumers but gives the providers of these services the guarantee of money coming in on time.
The fact that the Central Bank plans to mandate the system for all loans and finances being advanced by banks and finance companies is even better news.