Al Etihad Credit Bureau introduces app to assess real-time risk of cheques bouncing

ChequeScore aims to reduce the number of bounced cheques in the UAE

The Al Etihad Credit Bureau charges a fee of Dh10 plus VAT to assess each cheque's risk. Photo: Getty Images

Al Etihad Credit Bureau has unveiled a new mobile application that allows users to instantly assess the risk of a cheque bouncing.

The move follows the UAE government's decision to decriminalise bounced cheques earlier this year.

The ChequeScore app covers cheques issued by UAE-licensed banks and calculates the issuer’s credit score, payment behaviour, cheque issuance and clearance history in real time, the credit bureau said on Tuesday.

The app is free to download on both iOS and Android. The bureau charges a fee of Dh10 plus VAT to assess each cheque. A user can register for the ChequeScore app with an email address and phone number.

“ChequeScore will help reduce the number of bounced cheques in the UAE,” said Marwan Ahmad Lutfi, chief executive of the credit bureau.

“Last year, bouncing a cheque was a criminal offence; however, with the new law decriminalising this at the beginning of this year, it has become imperative that UAE businesses and individuals assess the risks associated with cheques they have on hand.”

In October 2020, the UAE Cabinet updated the country’s Federal Law on Commercial Transactions with several new provisions aimed at discouraging criminal lawsuits against people and businesses over bouncing cheques.

The updated law, which came into effect across the country on January 2, 2022, redefines crimes involving bounced cheques and the issuance of cheques without value.

Under the amendments, the Central Bank of the UAE, Ministry of Economy and Ministry of Justice introduced changes relating to the partial payment of cheques and toughened administrative penalties in cases when they are issued without funds.

The scope for criminalisation of bounced cheques owing to insufficient funds has been narrowed and confined to cases of bad faith and other cheque crimes.

People who issue cheques that bounce in Dubai, with a transaction value of up to Dh50,000, will be fined Dh2,000.

Bounced cheques with a value of between Dh50,000 and Dh100,000 will attract a Dh5,000 penalty.

A Dh10,000 fine will be levied for cheques issued in bad faith, with a value between Dh100,000 and Dh200,000.

Once a user registers on the ChequeScore app, they can scan a cheque, upload an image of it or enter the information manually. The details are then sent to AECB’s credit database and the user will immediately be shown the cheque's score, which ranges from 1 per cent to 99 per cent and indicates the probability of a cheque that could bounce in the next nine months.

The cheque score is also colour-coded: a low probability of bouncing is green, medium is amber and high is represented in red, the credit bureau said.

“We look at positive and negative cheques that the person has issued in the past few years,” Mr Lutfi said.

“The cheque receiver has an indication of how risky a cheque is. Once the score is known, the onus is on the receiver’s appetite for risk to accept the cheque.”

This app will increase the sophistication of transactions in the market and promote awareness of risks associated with cheques, Mr Lutfi said.

The cheque score is “dynamic” because a person’s risk profile changes over time, so the information has to be used instantly, he added.

There were 21 million cheques issued in the UAE last year, with an average value of Dh51,000 per cheque, the central bank’s image cheque clearing system shows. Bounced cheques from individuals and companies were cumulatively worth Dh41.6 billion in 2021.

AECB does not require customers' consent to access the data, Mr Lufti said. “We are not disclosing any confidential information. This is only a risk indicator and the final decision needs to be made by the cheque beneficiary.”

The app also features a reminder notification that is sent to the issuer at predefined intervals to inform them that the cheque is due.

During the app’s trial period, more than 11,000 cheques with a total value of Dh788 million were scanned through it. More than 6,000 users signed up for the trial, AECB said.