Dubai Looks to End Reliance on Check-Based Rent Payments

Dubai Land Department

After dominating the Dubai rental landscape for years, checks may be on their way out.

The Dubai Land Department (DLD) recently announced that it has fully integrated the emirate’s “ejari” rental platform with the United Arab Emirates’ (UAE) direct debit system to encourage the use of recurring bank payments for rent.

Arabic for my rent, “ejari” is a government initiative intended to make sure all rental transactions in the emirate are clear and transparent. And because all contracts need to be submitted and recorded in a standard format on the platform, it creates trust between landlords and tenants and can be useful for solving any disputes that may arise.

While some real estate agents have already integrated direct debit payments into their contracts, until now, there was no support for this build into the ejari system. Instead, payments have traditionally been made via check, with renters handing over a series of post-dated checks each time they renew their contract.

Now, however, the ejari platform has been linked to the Central Bank of the UAE’s (CBUAE) noqodi digital payment system, which includes the national direct debit scheme.

The new initiative has been enabled through a partnership between DLD and Emirates NBD and will enable recurring payments between all banks that participate in the noqodi scheme.

Upon announcing the collaboration last year, Sultan Butti bin Mejren, the director general at DLD, explained that the move to enable direct debit payments was part of efforts to digitize services in the emirate according to the Dubai Paperless Strategy.

“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.

What’s interesting about noqodi is that it is more than just an interbank direct debit platform.

Launched in the summer of 2019, noqodi is a digital wallet and payment system created by the Dubai Department of Finance and Emaritech—a technology company owned by Dubai’s sovereign wealth fund, the Investment Corporation of Dubai.

Noqodi, which means “my money” in Arabic, allows businesses and individuals to securely pay high-volume transactions of up to millions of dirhams (1 million dirham is about $272,000) for a range of government and non-government fees under the digital platform Dubai Pay.

Toward Global Paperless Rental Payments

While rental payments in Dubai are overseen by the DLD and the ejari system, meaning that all tenancy contracts are administered via a centrally governed mediator, the advantages of a unified digital platform extend to other markets too.

Even in the U.S., where direct debit is more widely used to pay rent, paper checks remain commonplace. In fact, one PYMNTS study found that in 2021, 34% of business-to-business (B2B) real estate payments were still made with checks.

Presented with such an opportunity for digitization, a number of banks and PropTech platforms are looking to shake up the rental payments space.

For example, in October, JPMorgan Chase announced that it is rolling out a new digital payment platform for landlords and tenants called Story.

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.”

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