Banking 101 for startups in the UAE

The United Arab Emirates is by far the biggest regional hub for startups – the UAE is home to over a third (35%) of all new startup companies in the MENA region, according to?Statista. For your startup to get funding, pay staff and receive payments from customers, you will of course need a banking solution.

However, as discussed in a recent Hub71?startup finance roundtable, getting access to banking has often been seen as tricky for new companies in the UAE. Fortunately, however, this is changing, and as our banking 101 for startups in the UAE shows, new solutions are emerging to make it easier to manage your company’s money.

In this blog you will learn about:

• What is KYC, and why is it important?
• Documents required to open a business bank account in the UAE
• Cost of opening a business bank account in Dubai, UAE
• Meydan Pay – what is it?
• Why entrepreneurs choose Meydan Free Zone

What is KYC and why is it important?

KYC, which stands for ‘know your customer’, is a set of global standards that financial services companies are encouraged to follow. The purpose of know your customer is to encourage banks, credit providers, accountancy businesses and other financial service providers to perform background checks on the people who are using their services and depositing money with them.

KYC is intended to help with:

• Making it harder for criminals to use the banking sector to store proceeds of crime
• Make it more difficult to use banks for money laundering
• Reduce the risks of fraudulent activities
• Clamp down on tax avoidance
• Tackle terrorism finance
• Avoid reputational damage for banks

Know your customer is important because many governments around the world – including the UAE – want to tackle illegal behaviour by making it harder for criminals to use the banking system. Using KYC is an effective tool for tackling financial crime, and so banks are encouraged to use it during their onboarding processes. Failing to perform KYC could lead to fines or reputational damage for banks and other financial services businesses. In the UAE, KYC is mandatory.

If you are a startup in the UAE, the country’s banks will require you to undergo their KYC process when applying for an account. This involves providing detailed information about who you are, where your funds come from, and how your business works. While it may at first appear onerous, for legitimate businesses complying with KYC is actually normally very straightforward. It also means that your customers and investors can have more trust in your business, as you have demonstrated that you are a legitimate company.

Documents required to open a business bank account in the UAE

Here are the basic documents required to open a bank account in Dubai, UAE. The process of opening a business bank account in the UAE for startups is normally fairly straightforward, although it can be useful to work with a local partner who understands the process and can guide you through the steps involved. To open your UAE business bank account, you will need to collate the following kinds of documents:

• An identity document – such as an Emirates ID card or a valid passport with residence visa
• A CV which describes your professional background – some banks require you to show several years of professional experience before opening a business bank account
• A utility bill to prove your current address – it must be dated from the previous three months
• Your UAE business’s founding documents, including free zone licence
• A personal bank statement for all shareholders and, if applicable, corporate bank statements for the previous six months
• Evidence of proof of ownership of your business
• A business plan which includes information about your clients, activities, financial plan and profit and loss projections

Sometimes banks may request further information as part of their KYC process. At Meydan Free Zone, our consultants can advise you on all the documents you’ll need to open your Dubai business bank account.

Cost of opening a business bank account in Dubai, UAE

Banks in the UAE do not charge you any money to open a business bank account. The UAE’s banks are very business-friendly and want to encourage entrepreneurship – so there are rarely any charges for opening the bank account itself.

That said, many banks will have minimum monthly balance requirements or minimum monthly payments, so it is important to ensure that you will be able to meet these going forward. The minimum monthly balance can range from AED 50,000 to AED 500,000, so it’s vital to ensure you’ll be able to meet these minimums. Failure to do so could lead to fines from the bank. You might also need to meet a minimum opening balance deposit.

If you’re unsure, our consultants at Meydan Free Zone can advise you on the minimum monthly balance for any banks you’re interested in working with.

Meydan Pay – what is it?

Meydan Pay is a unique digital payment solution that is available exclusively to startups that are based at the Meydan Free Zone. Meydan Free Zone is the only authority in the UAE which gives a guaranteed digital IBAN along with a trade licence (so long as you pass normal security checks). This means that when your start up launches from our free zone, you’ll instantly have a payment solution. That means you can avoid going through a lengthy process of applying for a business bank account elsewhere.

Meydan Pay is an ideal payment solution for UAE startups. Here are just some of the benefits of using Meydan Pay:

• Meydan Pay gives you a guaranteed and instant IBAN, which means you can send and receive payments right away, so long as you pass all security checks
• Meydan Pay offers a fully digital experience, allowing you to manage your money seamlessly from your mobile or PC
• Meydan Pay is available to both UAE citizens and foreigners – all nationalities are eligible to use Meydan Pay
• The technology can easily sync up with accounting solutions as well as e-commerce platforms, which makes running an online business even easier
• Meydan Pay can also be connected to a point-of-sale machine for retail businesses, meaning you’ve got all the tools you need to get working right away
• You can also make cash payments and withdrawals from the account
• You can open your Meydan Pay account in just four easy steps – it takes just a few minutes to apply!

Learn about the many benefits of Meydan Pay and how it works?here.

Why do entrepreneurs choose Meydan Free Zone?

Meydan Free Zone is a startup friendly business hub located in the centre of Dubai, close to the airport and business districts. We host numerous innovative startups working in a wide range of industries in the free zone, providing them with payment solutions that make it easy to get their business up and running and receiving funds from customers. You’ll also benefit from excellent technical support, 24/7 access and attractive, modern offices.

Our friendly and experienced consultants can support you with every step of?business setup in Dubai?free zones, and we also offer solutions for?e-commerce licences in Dubai,?plus our Easy Payment Plans, which means your startup costs are more manageable.

If you are looking for a payment solution and free zone for your startup, contact Meydan Free Zone to begin your business journey today.