Source: Gulf News 2013
The introduction of direct debit in the UAE financial system is a necessary part of continued efforts to modernise the country’s banking infrastructure and regulatory environment in line with international best practices.
Across the world, financial transactions are increasingly done electronically, making them faster, cheaper, easier and more accurate. More traditional means of transactions, like the issuing of cheques, the basis for much of retail banking in the UAE, are rapidly being phased out. Debit orders allow for automatic, electronic payment of regular bills — from utilities to personal loans — direct from bank accounts. Consumers are saved the time and trouble associated with making physical payments. The collection of payments for companies is also easier, reducing their cost of doing business. Importantly, decreasing the use of cheques will likely also reduce the criminal cases associated with bounced cheques. This is necessary to ease unnecessary strain on the criminal justice system and encourage the development of more sophisticated bankruptcy proceedings in the UAE.
This does not in any way reduce the responsibility of consumers to pay their debts or the consequences of default. In many countries, banks are able to charge penalties when there are not sufficient funds to cover debit orders. And, refusing to pay liabilities remains a fraud and a criminal offence.
A more secure and efficient retail banking system will boost both business and consumer confidence in the UAE, which is necessary in these troubled economic times.