Direct Debit based in Dubai facilitates the process of budgeting quarterly and half-yearly payments
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“Quarterly or semi-annual checks for rent and/or tuition are a huge budget problem for a month-to-month earner.” In this statement, the founder and managing director of the fintech start-up Direct Debit, Ummair Butt, summarizes the sole reason for the creation of the platform.
Launched in 2017, Dubai-based direct debit is an online avenue that allows merchants and payers to use a paperless system for recurring payments such as monthly rents, tuition fees, utility bills and loan repayments. Butt’s initial statement is perhaps a sentiment shared by many who depend on monthly pay as well. Budgeting for lump sum payments, such as rent and tuition, using post-dated checks can often be cumbersome. But with direct debit, users can opt for easier-to-account monthly direct debits instead of using post-dated checks. “The idea behind this came about when I noticed that every September I had a pretty large tuition check going out with my quarterly rent check,” Butt recalled. “As a monthly salary person, it would push me to use a credit card and then another struggle would ensue to get it all under control. I then decided that a service that aligns monthly expenses with incoming cash flow monthly would help the general population, as well as merchants and owners.
Direct debit offers are quite simple. By using a single login on the direct debit platform, users can ensure that they pay their major bills and fees in monthly instalments. Login can be done directly using the UAE PASS app, which is the national digital identity and signature solution that allows users to identify themselves to government service providers across the Emirates through a smartphone-based authentication. “As checks are no longer a security instrument under the law, we offer an effective alternative to merchants and payers,” Butt explains. “Research also shows that if you are allowed to pay monthly, NSF payments are reduced by 41%. So it’s a win-win situation for everyone!”
Source: direct debit
With direct debit, users can also manage and track past payments and plan future ones. The platform’s user-centric approach is evident in the way it sends email and SMS alerts ahead of each payment’s due date. These online transactions, between user and merchant, are therefore Direct Debit’s primary source of income. “Our business model is to ensure cost savings are passed on to merchants who want to go digital/paperless, while allowing payers to pay monthly instead,” says Butt. “The platform will remain free to payers, but merchants will pay per transaction, making it a variable cost.”
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It should be noted here that the direct debit was supported by the UAE government itself. As a business regulated by the UAE Central Bank, Direct Debit enables the majority of banks in the UAE to offer consumers a paperless way to manage payment transactions. “We host our system and merchant/payer data in a government-provided private cloud, which means the data on our platform is as secure as any government entity,” Butt adds. “It also means that we are compliant with the Dubai Electronic Security Center. For merchants, we also provide end-to-end automation, which includes but is not limited to customer account transformation or bank reconciliation functions as well as electronic contracts. Indeed, it is this automation service that Direct Debit offers to merchants that provides another source of income for the startup. “While the primary driver of our revenue remains transactions, we also provide end-to-end automation services which involve the integration of the merchant’s financial systems with our platform, which in turn provides us with a second source of income and also allows the trader’s investment,” explains Butt.
Amid all the digital disruption that Direct Debit professes, Butt says the platform also has a human component. “We will always ensure that there is a phone number to call and that there is someone on the other end to answer on both sides of our market,” he says. “Our partners and users will find us a physical partner.” }Having generated nearly AED 1 million in revenue so far, Direct Debit is now set to launch a paperless market in 2022. It will notably be accessible via UAE PASS. “So far, we have raised AED 1.5 million in two funding rounds, which has helped us develop a marketplace to launch in January next year,” Butt says. “We are also aiming to be an AED100 million business over the next three years through our regulatory approval and market expansion in Bahrain, Qatar, Saudi Arabia and Pakistan.”
Being selected to be part of the Mohammed Bin Rashid Innovation Fund (MBRIF) Acceleration Program has therefore boosted Butt’s Direct Debit ambitions. “Since our selection, we have been taken on an incredible journey, which included a lot of education and guidance,” he says. “The whole group of startups, mentors, as well as the MBRIF team now feel like extended family. It’s always nice to have family around, and to us that means MBRIF.
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