Asteco, the leading property services company in the UAE, has launched a digital payment service that allows its tenants to pay their rent through direct debit. Eliminating the need for post-dated rent cheques, the move is expected to boost efficiencies, enhance ease of doing business and save time and positively impact the real estate market.
Asteco has partnered with National Bank of Fujairah and Direct Debit System FZ LLE, a UAE-based provider of alternative low-cost payment systems, to leverage direct debit as an easy-to-use digital solution for all parties involved in a real estate transaction. As the sponsoring bank, National Bank of Fujairah is facilitating the process and ensuring seamless account reconciliation. Integrated into Asteco’s property management software, the direct debit system is currently operational and has been welcomed by landlords.
As per the system, the tenant signs a Direct Debit Authority (DDA) document with Asteco as a one-time step. Payments are then debited from the tenant’s current or savings account or credit card at the agreed date and frequency, and deposited into the landlord’s account.
Speaking on the initiative, Elaine Jones, Executive Chairman of Asteco, said: “As our world becomes increasingly digital, Asteco is working closely with its partners to embrace innovation and contribute to creating an efficient and secure financial environment in Dubai for long-term residents and newcomers alike.”
She added: “In line with the Smart Dubai 2021 strategy, we aim to become a paperless entity by end-2019 and this initiative is the first step in the journey. Through doing so, we believe we will maximize efficiency and seamlessly integrate this service into our operations to create the most enriched business experience possible for our clients, and immediately positively impact the real estate sector in the UAE.”
In the UAE, issuing post-dated cheques for rent is commonplace and, Asteco believes, outdated. Direct debit is the solution to most problems related to rent cheques. Allowing tenants, especially those who are new to the UAE or have an outstanding bank loan, to pay their rent in multiple installments makes the process simple, convenient and safe. Smaller and more frequent rent payments also ease the cash flow for tenants that currently often resort to taking out loans to meet their rent commitments.
Meanwhile, landlords benefit from increased assurance of a regular and stable income. A steady stream of frequent payments assists the landlord or developer in meeting bank repayment schedules. Developers are now commonly offering monthly payment terms or one percent per month buying schemes.
Vince Cook, Chief Executive Officer of National Bank of Fujairah, said: “We are delighted to partner with Asteco and Direct Debit System FZ LLE to create what we believe is a critical milestone in the real estate sector. The move to paperless rental payments benefits all parties involved and helps ease the significant burden of the cheque payment structure. We seek to partner with other industries to develop similar systems in the coming months.”
Protected by robust security technology, direct debit is a secure, convenient and fully automated payment method that saves time and money, and is well-established in European countries as well as the US, Brazil and South Africa. The Central Bank of the UAE introduced this alternative payment method in 2013. According to Worldpay, a leading global payment processing company, alternative payments accounted for approximately 59 percent of settlement activity in 2017, up from 43 percent in 2012.