Lenient legal recourse for bounced cheques sees acceleration towards electronic payments.
Businesses in the United Arab Emirates face little recourse for bounced cheques accelerating a push towards digitised payments in the region.?
Among new amendments to the UAE’s Commercial Transactions Law, implemented earlier this year, a bounced cheque due to “insufficient funds” is now considered a civil matter, through the civil court system, rather than a criminal one.?
Criminal prosecution for a bounced cheque has been consigned to ”fraud, forgery or bad faith”. Banks are required to make “partial payments” for bounced cheques, however, funds available in a defaulting Payer’s bank account must exceed 5 per cent of the total value of the payment?in order to?avail of such reimbursement.?
The news comes amid growing unease in the Emirates regarding the usage of post-dated cheques. Both consumers and businesses have described an archaic environment where the threat of massive upfront lump sum payments and bounced cheques impact their income and cash flow, respectively.?
In a move signalling a move away from cheque payments in the region, the Dubai Land Department (DLD) will soon adopt direct debit as a payment option for some of its customers. The news comes at a turbulent time in the Dubai property market as prices rose by over 10 per cent in the year to May 2022; apartment prices rose by over 9 per cent in same period.?
Details are yet to be announced on the process involved. Some UAE residents have?questioned?whether or not?a tenant can halt the direct debit, and if the scheme announced is a rental loan, where the landlord receives the rent upfront and the tenant is paying back with equal monthly instalments.??
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Welcoming the news of the adoption by the DLD of direct debit, Co-CEO of Zink Pay - who will also provide direct debit services and other payment options to UAE tenants - said, “Direct debit will provide DLD customers with a simple, secure and convenient payment solution that will give them flexibility and the option of paying their fees in monthly instalments.”?
However, McGreal added that the DLD partnership with Emirates NBD bank will only benefit tenants who are customers of ENBD. Those without ENBD accounts will still have to provide upfront cheque payments to their landlords, which can have a significant negative impact on a family’s budget.?
??“We must solve the problem of upfront rental payments and post-dated cheques for all tenants and all landlords, irrespective of what bank they bank with.”??
Zink Pay is currently in discussions with UAE banking authorities to roll out services to help customers pay for a myriad of services including rents, school fees, insurances, gym memberships, and any other recurring payment.?