The Central Bank of Oman launches the digital direct debit s...

The Central Bank of Oman has launched the digital direct debit service following a series of enhancements aimed at advancing the banking sector and payment services in the Sultanate of Oman. It is worth noting that the Bank, in cooperation with the banking sector in Oman, had previously launched on a pilot basis in 2021 both the Direct Debit System and the Mandate Management System for direct debit.

The direct debit service acts as a payment instruction that authorises a deduction from the payer’s bank account in favour of the beneficiary, based on a request initiated by the latter. This enhancement enables the electronic issuance, processing, and settlement of direct debits, ensuring ease of use for both individuals and businesses. It also supports digital transformation in the financial sector and reduces reliance on cheques.

Several banks in the Sultanate of Oman have already started offering the electronic direct debit mandate service to their individual, corporate, and financial sector clients. It is expected that the remaining banks will complete the implementation of this service by 2025.

The electronic direct debit mandate aims to improve the current paper-based system by achieving several objectives, including reducing operational costs compared to cheques, minimizing errors and transaction processing time, enhancing the efficiency of banking process automation, strengthening banking security, and accelerating fund transfers between various parties.

The legal reliability of this service is reinforced by the National Payment Systems Law No. 8/2018, which ensures the ability to take legal action in the event of a returned direct debit instrument. It also helps mitigate risks of fraud and forgery typically associated with cheques, thereby increasing confidence in digital transformation and paving the way for the digitisation of more banking services in the Sultanate of Oman.