After years of being in the rental market in Dubai, checks could be on their way out. The United Arab Emirates’ direct debit system and the Dubai Land Department’s (DLD) “ejari” rental platform have been completely connected, according to recent news from the DLD, in an effort to promote the usage of recurring bank payments for rent.
The term “ejari,” which is Arabic for “my rent,” refers to a government programme designed to ensure that all rental agreements in the emirate are open and honest. Additionally, it fosters confidence between landlords and renters and can be helpful in resolving any issues because all contracts must be filed to and documented in a standard manner on the platform. Although some real estate brokers have already included direct debit payments in their contracts, the ejari system did not previously offer this feature. The conventional method of payment has been via check, with renters delivering a string of post-dated checks each time they renew their lease.
The national direct debit programme is now part of the Central Bank of the UAE’s noqodi digital payment system, which is now connected to the ejari platform. The new project, which will permit recurrent payments between all banks that take part in the noqodi programme, has been made possible thanks to a cooperation between DLD and Emirates NBD. The Dubai Paperless Strategy calls for all services in the emirate to be digitally transformed, and Sultan Butti bin Mejren, the director general at DLD, explained this when the partnership was first announced last year, according to the PYMNTS. “Such collaborations will help facilitate and streamline the processes involved in the property market by employing progressive machinations on the path towards replacing the legacy systems in place,” he said at the time.
Noqodi is an intriguing platform since it offers more than simply interbank direct debit. Noqodi, a digital wallet and payment system, was introduced in the summer of 2019 by the Dubai Department of Finance and Emaritech, a tech firm controlled by Dubai’s sovereign wealth fund, the Investment Corporation of Dubai. Noqodi, which translates to “my money” in Arabic, enables companies and individuals to safely make high-volume transactions of up to millions of dirhams for a variety of government and non-government expenses using the online payment system Dubai Pay.
The DLD and the ejari system regulate rental payments in Dubai, which means that all tenancy agreements are handled by a centrally controlled mediator. However, the benefits of a single digital platform also apply to other markets. Paper checks are still commonly used, even in the United States where direct debit is more frequently used to pay rent. In fact, according to a PYMNTS analysis, 34% of business-to-business (B2B) real estate transactions in 2021 were still conducted using checks.
Given this chance for digitalization, a number of banks and PropTech platforms are attempting to revolutionise the rental payments industry. For instance, JPMorgan Chase declared in October that it would be launching Story, a brand-new digital payment system for landlords and tenants. Explaining the need for such a solution, Sam Yen, the bank’s chief innovation officer said, “The vast majority of rent payments are still done through checks… if you talk to residents to this day, they often say ‘The only reason I still have a checkbook is to pay my rent.’ So there are lots of opportunities to provide efficiencies there.”
