Direct Debit System - Revolutionizing the Payment Landscape in the UAE.

1. Direct Debit System
Revolutionizing the Payment Landscape in the UAE

3. INDEX
3 Preface
4 Evolution of Payment Systems
5 Direct Debit System
6 Direct Debit Workflow
7 Benefits of Direct Debit System
8 UAE Direct Debit System (UAEDDS)
9 UAEDDS Inward / Outward Direct Debit Cycles
10 What is the Implication of the UAEDDS to Banks?
11 Newgen Solution – Preparing Banks to Meet the
UAEDDS Challenge
12 Benefits of the Newgen Solution
13 About Newgen
14 Newgen's Payment System Experience

4. Ensure peace of mind for your
customers and keep them for life
Preface
A payment system comprises the sophisticated, technology driven Why Direct Debit System ?
cultural, political, legal, economic and image-based/electronic modes of
business practices and arrangements payment. A key development in this
! A simple, secure and convenient
prevalent within an economy to process of evolution is the
evaluate or exchange ownership of introduction of a system that shall be payment system
! Peace of mind for customers with no
goods and services. In its simplest form, referred to as the UAE Direct Debit
a payment either stems from a System (UAEDDS). The UAEDDS is overlooking of payment due dates
transaction between buyers and sellers an initiative of the Central Bank of the ! Quick resolution of customers'
in a market, or from a financial UAE (CBUAE) to provide an queries and immediate refund for
obligation. alternative method of effecting undue payments made
recurring payment transactions for ! No need to issue a new mandate
An efficient payment system utility services such as telephone bills,
each time the payment amount
infrastructure is necessary for the electricity bills, etc., reducing the need
for issuing and handling paper changes
financial stability and advancement of
instruments. ! Elimination of cheques and the
economic activities in an economy. A
well functioning payment system associated fraud risk
ensures reduced financial risks by Designed to operate on the basis of ! No more queuing at banks and cash
increasing reliability and speeding fully automated straight-through- offices to pay bills
settlement of transactions. It further processing, the UAEDDS would
facilitates effective implementation of require manual intervention only in
monetary policy by underpinning its exceptional circumstances. The
transmission mechanism. Central banks system depends upon mutual trust
thus have strong incentives to between all participants, and promises
restructure the payment system significant benefits for each.
infrastructure and ensure its smooth
functioning. This document will not only introduce
you to the Direct Debit Payment
The payment system infrastructure in System, but also discuss its impact on
the UAE has gradually evolved from the Consumers, Service Providers and
traditional cash and paper-based Banks.
payment instruments to more
3

5. As per the World Payments Report 2011, the global volume of noncash
payments grew by 5 percent in 2009, to 260 billion transactions
Evolution of Payment Systems
The first description of a form of decline in cheque use over the past the Federal Reserve Banks first moved
payment in the medieval world was decade. Cheques are a relatively high- currency via telegraph. However it was
observed in the early eleventh century cost payment method compared to only after the automated clearing house
by an Iranian traveler named Nasir-i their electronic counterparts. (ACH) was setup by the US Federal
Khosrau while visiting the city of Basra Moreover, as cheque use is declining Reserve, in 1972, that electronic
(in present-day Iraq). There he many of the overheads remain, meaning payments became widespread.
recorded a form of payment, known as that the unit cost of processing a
the sakk, which was characterized as a cheque is increasing over time. While the payment trends clearly differ
merchant's written instruction ordering across geographies, the shift towards
his bank to make a payment from his Today, paper itself is seen as an electronic payments is global. Driven by
account. This was more in the nature of inconvenience in the payment process. rapid technological advances and lower
an instrument that came to be known as Just as paper money replaced precious costs, as well as the additional
a “Bill of Exchange” and was a metals paving the way for the industrial convenience that they offer to
convenient form of payment between revolution, in the recent years clearing consumers and businesses, electronic
local merchants. However, this laid the of payments has evolved from exchange modes of payment, such as Direct
foundation for the development and of paper-based instruments to Debits, have gained momentum over
progression of the modern cheque. electronic exchanges, with clearing the past few years.
times shortening correspondingly.
While the cheque remained the most
popular payment instrument for The advent of electronic money can be
decades, there has been a steady traced back to 1918, the year in which
SOLUTIONS FOR BUSINESS PROCESS & CONTENT MANAGEMENT 4

6. Direct Debit System
What is a Direct Debit ? What is a Direct Debit Authority ?
Direct Debit is essentially a payment A Direct Debit Authority (DDA) is an care of all further payments. However,
system allowing a customer to make instruction from a customer to his the payer receives advance notice of
regular payments (e.g. bills, bank authorizing a payee, such as a the bill amount, every time his account
installments, subscriptions ...etc) public utility, insurance company, etc., is debited.
without having to visit the bank. Direct to collect varying amounts from his
Debits are used throughout the world account in settlement of outstanding
and are acknowledged as one of the bills for goods or services provided.
most cost effective and efficient Once the DDA has been signed, and
methods of processing regular and returned to the Originator, it is the
periodic payments. responsibility of the bank to take
Key Participants
Originator
The Originator or Payee, i.e. the organization (electricity, telephone,
car leasing company etc.) that provides the goods or service
Sponsoring Bank
The Sponsoring Bank, where the Originator maintains its accounts
Payer
The Payer, i.e. the customer/service user who agrees to pay the bills
using direct debit, and whose account is to be debited
Paying Bank
The Paying Bank, i.e. the bank holding the Payer's account, which is to
be debited
Central Bank of UAE
The Central Bank of the UAE (CBUAE), which is responsible for the
governance of the scheme and the operation of the UAEDDS portal
5 SOLUTIONS FOR BUSINESS PROCESS & CONTENT MANAGEMENT

7. Direct Debit Workflow
1
Invitation to make
future payments using
Direct Debit (DD)
5
Starts presenting
PAYER/ direct debits to it’s
CONSUMER bank account
ORIGINATOR/
2 SERVICE PROVIDER
Fills in DD mandate
form for direct debit
authorization
4
Intimation of
6 direct debit
DD instruction authority
forwarded
to payer’s bank
SPONSORING BANK/
ORIGINATOR’S BANK
7
Bill amount debited
from the payer’s
account and credited
PAYER’S BANK to the originator’s
account
3
Sends completed
DD mandate form
SOLUTIONS FOR BUSINESS PROCESS & CONTENT MANAGEMENT 6

8. Benefits of Direct Debit System
For Payers For Originators
The Direct Debit System offers a simple, safe and The Direct Debit System offers both financial and
convenient payment option, enabling customers to pay administrative benefits to the Originators:
recurring bills as and when they fall due. The benefits to
Payers include: ! Substantial reduction in the cost of collection, with no
need for a detailed reconciliation process to check the
! No need to remember payment due dates receipt of payments
! No need to write cheques, locate drop boxes, or visit ! Originators can focus on unpaid direct debits – in other
bank branches / cash offices words, they can manage by exception
! On time payments – no worries about services getting ! Elimination of significant paperwork and manual
discontinued due to non-payment of bills, or late handoffs
payment penalties (subject to funds being available in ! Reduced operational expenses such as front office
the Payer's account) administration, stationery and postage
! Any queries regarding undue amount debited are ! Greater predictability in cash flow
resolved quickly by the Paying Bank, with immediate
refunds where appropriate
! No need to sign a new mandate each time the amount
changes (e.g. utility bills)
With Direct Debits your customers will have
less worries and more time to themselves

9. The UAEDDS will act as a Nett Settlement System, with posting of a
consolidated debit/credit once every business day at settlement time
UAE Direct Debit System (UAEDDS)
UAEDDS Portal
SOLUTIONS FOR BUSINESS PROCESS & CONTENT MANAGEMENT 8

10. UAEDDS Inward / Outward Direct Debit Cycles
UAEDDS – Outward Direct Debit Cycle
Validation checks on file format,
originator master and DDA master
Upload on UAEDDS Portal
Reading pay/
Data Entry/Bulk file
no-pay response
upload of DD
from Portal
instructions
by Originators and/ or
Sponsoring Bank
Return Memos
Generation Credit Posting in CBS
for Originators
UAEDDS – Inward Direct Debit Cycle
Validation checks on file
format, originator master
and DDA master
Manual workstep for
exception handling
Reading DD
files from
UAEDDS
Portal
Upload on Automatic Financial
UAEDDS Portal Verification with
CBS
Credit Posting
in CBS Web Referral -
Empowering RMs to
take financial decision
9 SOLUTIONS FOR BUSINESS PROCESS & CONTENT MANAGEMENT

11. What is the Implication of the UAEDDS to Banks?
Introduction of the UAEDDS will cause the UAEDDS retaining mandates
immense upheaval as banks realize the ! Notifying the Central Bank and the ! Answering queries or resolving
need to assess the adaptability of their other participating banks of the complaints from customers in
existing legacy systems to the Originator's identity as quoted in the respect of the Direct Debit System
requirements of the new payment mandate or individual Direct Debit
system. Handling thousands or perhaps ! Notifying the Originator regarding any transactions
millions of direct debit instructions on a unpaid Direct Debits ! Producing reports detailing all new
monthly basis is no easy task. Moreover, ! Processing appropriate refunds to the and cancelled mandates
banks will need to prepare themselves
Paying Bank immediately
to address the increased financial and
! Ensuring that the Originators send the While the Direct Debit System
administrative risks associated with the
completed mandates to the right represents a significant challenge for
direct debit instrument.
destination in the Paying Banks banks, requiring them to upgrade their
legacy systems to facilitate straight-
Role of Sponsoring Bank through processing of Direct Debits, it
Role of Paying Bank
! Assessing prospective Originators for also presents an opportunity for banks.
! Accepting or declining Direct Debit
admission to the Direct Debit scheme Faster, safer and easier payments would
Authorities based on fulfillment of
! Briefing prospective Originators fully certainly result in improved customer
certain pre-defined criteria; The
about the code of practice under the satisfaction and loyalty. Further, with no
Paying bank may or may not provide
UAEDDS more queues at branches for paying
the customer with a reason for
! Getting completed and maintaining bills, bank staff can focus on building
rejecting a mandate
the Originator's Direct Debit relationships and generating revenues.
! Routing the Direct Debits to the right
Agreement & Indemnity Banks that most successfully implement
bank accounts
! Ensuring that the Originators it the UAEDDS can certainly transform
! Verifying customer mandates for
the direct debit payment instrument
sponsors comply with the terms of completeness and accuracy, and into a significant revenue stream.
Does your bank have a strategy in place to
provide a compliant direct debit process?

12. Newgen Solution – Preparing Banks to Meet the
UAEDDS Challenge
Over the past few years the payments Fund Transfer (EFT), mobile capture, (data entry / upload, data validation,
landscape, across the globe, has been etc. exception highlighting, batch-making /
experiencing a transition from paper- Newgen's solution for Direct Debit totaling, compression and secure
based modes of payment to faster & payments helps banks to automate upload etc.)
more reliable electronic payment error-prone processes and efficiently ! Document & Records
systems. To remain competitive it has manage EFTs while reducing their Management – To manage both
become imperative for banks to replace operational expenses. Further, the paper-based as well as electronic
their out-dated systems with new system can scale up as your business images and data for indexing, archival,
payment systems that can help them expands, to accommodate your retrieval throughout its life-cycle
adapt to constantly evolving business growing business requirements. ! Management, Monitoring &
needs. Tracking – To monitor every step
The Newgen solution is an integration under the EFT process for removing
Newgen offers a complete suite of of following core software-based process bottle-necks; comprehensive
payment solutions (image and non- technologies: reporting and audit trails maintained
image based), enabling banks to for “who-did-what-when”
effortlessly migrate from legacy ! Workflow – To define the routes for
payment systems to Image-based
incoming and outgoing direct debits
Cheque Clearing (ICCS), Electronic
Solution Features
Automatic receipt of Originator instructions,
Ÿ Ÿ online interface provides real-time view
Intuitive
including registration and transaction of data
processing Ÿ notification via multiple channels
Payer
Easy-to-use on-line interface for Originators
Ÿ
Complete range of workflow and case-
Ÿ
Exception handling, feedback, reporting and
Ÿ management facilities
billing Maintaining mandates
Ÿ
Automatic validation for UAEDDS rules and
Ÿ
Validation for UAEDDS rules and mandate
Ÿ
mandate compliance compliance
Exception notification and reporting
Ÿ
Newgen has partnered with 50+ banks in the last 5 years to
facilitate payments (EFT and ICCS)
11

13. Benefits of the Newgen Solution
! Straight-through processing ! Platform-independent
! Thin client architecture + Application built on open standards
! Browser-based access to all users + App servers: Websphere, JBOSS, Weblogic
! Only server installation and updates; no installation on + Databases: Oracle 11g, SQL Server 2008
client side for patches or upgrades + OS: Windows Server 2008, Sun Solaris, AIX
! Database access through web service ! Real-time integration with banking applications
+ Clients do not connect to database directly ! Audit trail on who did-what-when concept
+Database security compliance ! Multi-currency/ multiple cycles support
! Better response to customer queries ! Support for value capping through the EFT process
Your customers no more need to worry
about overlooking payment due dates

14. About Newgen
Newgen Software Technologies Limited is a leading global provider of Business Process Management (BPM),
Enterprise Content Management (ECM) and Customer Communication Management (CCM) with a global
footprint of 900 installations in over 50 countries with large, mission-critical solutions deployed at the world's
leading Banks, Insurance firms, BPOs, Healthcare Organizations, Government, Telecom Companies & Shared
Service Centers.
Newgen Software has been positioned in the Magic Quadrant for Business Process Management (BPM) and
Enterprise Content Management (ECM). The company has been recognized by distinguished analyst firms like
Frost and Sullivan as A 'Hot Company to Watch for' in their global ECM Market report, 2009 and by IDC in its
exclusive report “Newgen Software: Global Leader in Business Process Management and Document
Management Solutions”. Newgen is the winner of prestigious awards, such as the CNBC-TV18, “Emerging India
Award 2008”.
Newgen's Quality Systems are certified against ISO 9001:2008 and Information Security Standard, ISO
27001:2005. Newgen has been assessed at CMMi Level3.
13

15. Newgen’s Payment Experience
SAUDI ARABIA
BANGLADESH
EGYPT INDIA
UAE
THAILAND PHILIPPINES
UGANDA
GHANA
KENYA
MAURITIUS
Customers
SOLUTIONS FOR BUSINESS PROCESS & CONTENT MANAGEMENT 14

16. CORPORATE OFFICE INTERNATIONAL OFFICES
New Delhi Kolkata UAE
Newgen Software Technologies Ltd. Newgen Software Technologies Limited Newgen Software Technologies
A-6, Satsang Vihar Marg, Punarnava Complex , Room No. 505, 5th Floor Off No: 314, Building No: 3
Qutab Institutional Area, 13, B.B Ganguly Street, Kolkata-700012 P O Box. 500297, Dubai Internet City
New Delhi - 110 067 INDIA Tel: +91-33-65340498 Dubai, UAE
Tel: +91-11-4077 0100, 2696 3571, 2696 4733 Telefax: +91-33-40037770 Tel: +971 44541365
Fax: +91-11-2685 6936 E-mail: newgenkolkata@newgen.co.in Fax: +971 44541364
Email: corpmktg@newgensoft.com Email: emea@newgensoft.com
SALES & SUPPORT OFFICES
Mumbai US
Bangalore Newgen Software Technologies Ltd. Newgen Software Inc.
Newgen Software Technologies Ltd. B- Pitruchhaya, Paralkar Marg, 1364 Beverly Road, Suite 300
FF-2, Alpine Arch, 10 Langford Road Off - Ranade Road, Shivaji Park, McLean, VA 22101
Bangalore - 560 025 Dadar - West, Mumbai - 400 028 Tel: +1-703-749-2855
Tel: +91-80-2223 7765, Telefax: +91-22-2444 6587-89 Tel: +1-703-439-0703
+91-80-2227 3614 Email: newgenmumbai@newgen.co.in Email: usa@newgensoft.com
Telefax: +91-80-2229 1615
Email: newgenbangalore@newgen.co.in
Chennai New Delhi
Newgen Software Technologies Limited Newgen Software Technologies Ltd.
Ground Floor, Quanta ZEN E-44/13, Okhla Industrial Area Phase II
38, Dr. Thomas Road, Off. South Boag Road New Delhi - 110 020
T. Nagar, Chennai - 600 017 Tel: +91-11-4653 3200, 2638 4060, 2638 4146
Tel: +91-44-4356 0890 Telefax: +91-11-2638 3963
+91-44-4356 0891 Email: newgendelhi@newgen.co.in
Fax: +91-44-4356 0892
Email: newgenchennai@newgen.co.in
Hyderabad
Newgen Software Technologies Ltd.
304/2, 3rd Floor, Block-I, White House
6-3-1192/1/1, Kundan Bagh
Begumpet, Hyderabad - 500 016
Tel: +91-40-4456 5656, 2341 6857
Fax: +91-40-4456 5666
Email: newgenhyd@newgen.co.in
SOLUTIONS FOR BUSINESS PROCESS & CONTENT MANAGEMENT