Cheque books are the preferred choice for making rental real estate payments despite Dubai announcing a direct debit system (DDS) earlier this year, experts told Arabian Business.
“This is largely due to the fact that bounced checks formerly being a criminal offense and a lack of trust in other payment methods, such as bank transfers, which can lead to issues with late payments,” Walid Shihabi, the co-founder and CSO of real estate investment platform Keyper said, adding that cheque books account for over 90 percent of rental payments and most real estate purchases.
The DDS was announced under a new Ejari update which included the Noqodi Ejari Direct Debit Service (DDS), offering tenants the convenience of automatic rent payments through direct debit.
The Central Bank of the UAE (CBUAE) has introduced the Direct Debit System (UAEDDS) as part of this initiative, aiming to provide Dubai residents with an automated payment solution for recurring transactions directly from their bank accounts, the Dubai Land Department (DLD) said.
However, according to Shihabi, alternative payment methods like direct debit and credit card payments have “struggled to gain adoption because they either require a registered merchant to receive the payment or add significant cost, making them less appealing,” he said.
Cheque books are a ‘comfort zone’ in Dubai real estate
For those in Dubai, cheque books offer a “comfort zone,” Anisha Sagar, Director of Property Management at real estate agency Allsopp & Allsopp said adding that the preference to pay by credit card, by direct debit or to pay by bank transfer is just “starting.”
“Obviously, the bank transfer and credit card payments are not protected. So, the change that we’ve started seeing is that Naqodi and Ejari specifically brought in a change where direct debits were introduced for only property management companies. There is indeed a change coming and we have seen people starting to use the direct debit system,” she said.
However, Sagar said, this system is not available to the vast majority of rental property owners in Dubai, and they still have to rely on cheque books to make payments.
“There are some people that don’t understand that the know this new direct debit system that has come in does protect you in the same way as a cheque book.
“Although cheques are a more time-consuming process, they are still a key part of the rental culture in Dubai as the system above is yet not opened to non-managed properties. It is however a brilliant system, but it will take time to be implemented to the wider circle,” she said.
Will cheques be used in the future to make payments?
According to Sagar, cheque books could remain in the UAE for real estate payments.
“I can foresee that it is not long before that the direct debit system is offered to the wider circle of people that do not have a property managing agent for example, and I’m sure they will find a way to give this offering to everyone and make it more streamlined throughout,” she said.
However, given the future of cheque books itself, UAE property agents will have to make the shift quickly.
“In an ever-changing landscape of financial habits, the demand for cheque books finds itself at a crossroads. As digital payments surge ahead, the once-familiar sight of ink on paper is starting to fade. Consumer behaviour is steering this change, guided by the twin forces of convenience and technology, especially in the UAE where digital transactions have become the norm,” Ayesha Abbas, Head of Consumer, Private and Business Banking, Standard Chartered UAE, said.
Given the current financial landscape, the surge in digital transactions is fundamentally reshaping the approach to money management, she said, adding that the allure of instant transfers and online convenience has relegated cheque books to the background.
However, despite this the familiarity of traditional methods still stands, offering a sense of comfort to individuals who find comfort in the act of writing a cheque, Abbas said.
“However, these pockets of demand stand against a tide of transformation, as younger generations and modern needs champion the efficiency and speed of digital payments. Moving forward, I believe the demand for cheque books in the UAE will continue to decline as the broader trend leans toward a seamless and tech-driven future of financial transactions,” she added.
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