Tag: uae

What it’s like launching a Fintech startup in the UAE

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Ian Dillon

It took us 4 years – but we launched our Fintech startup NOW Money in May this year, and the reception so far has made it all worth it.

We started NOW Money in the summer of 2015. Back then we didn’t yet know how little we knew about what we were trying to do and how to do it, but we did know exactly the problem we wanted to solve.

Bank accounts are often accessible only to those that earn over AED5,000 per month. In the GCC, there are 25 million low-income workers that earn less than this. This means no bank accounts, no online payments, no ability to send money home using cheap online providers that almost everyone from Europe is used to. Our goal was to provide the best account in the GCC, with these excluded workers our customers.

My co-founder, Katharine, and I had seen the success of the new mobile only ‘challenger banks’ that had started in the UK – the likes of Monzo, Startling and Revolut. Customers loved them and had a passion for them that had never been seen for banks and financial services companies before. We wanted to do the same thing first in the UAE and then across the GCC.

These days, ‘startup’ and ‘Fintech’ are the new big buzzwords. Billions are invested into Fintech startups annually; many people have entrepreneurial ambitions to start or work at a startup and a number of corporates have strategies to partner with or support entrepreneurs and startups. However in 2015 mindsets were completely different. Almost no one understood why we’d left well paid jobs and the corporate ladder. We were laughed out of meetings, often told that what we were trying to do was impossible. We couldn’t get legal support, couldn’t get a bank account ourselves and were lightyears away from being able to raise funding. We made life hard for ourselves by being focused on remaining independent, creating our own technology and providing the best customer service possible from day 1, and the delays were demoralising and at times we wondered if we’d ever get to launch.

However with persistence we broke down each of the barriers – and 4 years and a lot more grey hairs later we launched in May this year. We had to overcome so many challenges in those 4 years to launch, the most time consuming being banking (try getting an account, let alone a banking partnership as a Fintech startup in the UAE) and regulatory issues.

These barriers took so long to break down that we had got used to running the company in a cycle of break down a barrier, move to the next problem, raise funding to keep the lights on, repeat. So when we had finally received the last of the approvals required earlier this year and launched, it all felt quite surreal.

For the first time, and after years of planning, we had customers. This meant the problems we had to solve quickly changed from dealing with bankers, regulators and investors, to issues such as customers losing their cards, remittances being delayed, customers not having the right documentation to open an account, etc. We realised that even with the most comprehensive planning, you cannot prepare for and have no idea what will happen until you launch! We’ve learned to be very nimble and adaptable, aided by our incredible in-house team of tech developers that are all with us in Dubai and everyone in the company (and this means everyone!) is on the ground with customers at least once a fortnight. We believe it is this connection with our customers and ability to innovate quickly to optimise ourselves around their needs which sets us apart from the competition.

The satisfaction and validation of our mission that we’ve seen since launching has been immense. Numbers of customers continue to grow strongly – we’ll accept over 2,000 new customers in September alone – but the most pleasing thing has been the reception from customers. 

With an account like NOW Money, it would be easy for our customers to use the MasterCard we provide to take their salary out at an ATM and continue to spend this cash in the same way in which they did before, and at first they did. In our first month in May just 12% of our customers used the account for anything other than cash withdrawal. However since then the engagement has exploded as customers discover the range of services available to them in the app – services which save them significant amounts of time and money, which ultimately ends up in the hands of their families back home. And as word of mouth spreads amongst our customers, the change in behaviour has happened rapidly. Last month almost 60% of our customers made an in-app transaction or significant card spend in-store, and this ratio is continuing to trend strongly upwards. More importantly, the direct feedback we collect daily has been overwhelmingly positive, with customers used to being ignored often surprised that a company would go to such lengths to provide a great solution for them.

Also pleasing is to see the appreciation of their employers. Employers in the UAE often get a bad rap for the way they treat staff – but those we’ve worked with really do care and on a couple of occasions I have even been called directly to thank us for providing a service their employees like so much and that provides them with financial independence they’ve not experienced before. This has led to employers referring us to other corporates in their networks – the very best form of sales lead.

We’ve just closed a funding round, led by the UK’s leading Fintech Venture Capital investor. We are working hard on adding additional exchange and other partners to our network to give our customers more choices, preparing for upcoming launches to Saudi and Bahrain, and working on an offering for SMEs in the UAE. But one goal that will remain our number one priority – the same mission that got Katharine and I through the tough times for 4 years – is providing the best account in the GCC for our customers. We don’t believe that income, nationality or any other factor should stop anyone from having the best experience and loving their account, and so far the response we’ve seen from our customers is proving that it isn’t.

We’re changing the way financial services operates in the UAE, and operate in a very transparent and openly collaborative manner. If you’d like to learn more or reach out with any opportunities, please reach out to me on LinkedIn, Twitter or comment on this post.

Hope in the city of neon lights

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Tall buildings, glittering hotels and a luxury lifestyle are all things commonly associated with Dubai. However, there is another side to this jewel in the desert. Many people forget about the blue collar workers who build our city and make it turn. They’re an integral part of Dubai and the UAE but all too often they get ignored.

I’ve lived in Dubai for ten years now and I still only know a relatively small amount about blue collar workers. A few weeks ago I decided to change this and had a chat with a man near where I live. At first he was hesitant to reveal too much to me but after I explained why I was interested in his life he was more than happy to talk and share his experiences with me.

His name was Bilal, and he told me about his daily routine. He wakes up at 5am every day as he has to get a lift from his accommodation, near the Iranian Hospital, to his work which is in JAFZA. He has to be at work at 8am and this is the only way he can make it on time. Bilal starts his duties as a removals assistant as soon as he arrives at work. He can be sent anywhere, his company covers all of Dubai and Sharjah, and once he arrives at a client’s location for the day he will be moving and packing heavy items. The work is physically demanding and very hard in the summer when the temperatures are so high. Bilal explained that he often gets sick, especially during the summer and he believes this is because of heat related issues.

I asked Bilal if he had a bank account in order to receive his salary. He told me that he’s been in Dubai for nearly two years but has never had an account as his salary is too low to open one (in the UAE, most banks require a minimum salary of AED 3,000 per month to open an account). He also said that banks require a lot of documents which he struggles to provide. I wondered how he gets paid if he has no bank account and Bilal explained that his boss transfers his salary to an exchange house for him to collect. The exchange house is located in Deira Naif which is a good distance from where he lives so he has to spend more money travelling to collect his salary. The exchange house also deducts AED 5 for the service. Whilst this might seem like a small amount, this is the cost of food for one day for Bilal so it’s significant to him.

Bilal tells me the reason he puts up with this is because of his family in Pakistan. He wants to support them and provide them with a positive future.

Bilal is just one of many blue collar workers facing these issues in Dubai, similar to those in any big city. However, it’s time to make a change. Here at NOW Money, we believe that everyone should be able to access financial services, regardless of how little they earn. Financial inclusion benefits society as a whole not just those at the bottom end.  We aim to make money transfers as easy as ‘liking’ a picture on your favourite social media account, and this is one click that could actually change someone’s life.

A self starter

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Meet Daniel. To the uninformed eye he appears to be an ordinary barista but looks can be deceiving.

He doesn’t just make coffee. He’s essentially a ‘one- man team.’ He has been trusted to run the entire branch with only an intern who has recently joined him. Duties include handling inventory, permits, licenses and anything else that the municipality requires; all on his own. Despite his humble demeanor, his talent is self-evident. He tells me how small the margin for error is. For example, selling a single item past its expiry date can result in the branch being closed. For a conglomerate to apportion this level of responsibility to a single employee is unheard of and the accountability never ceases. “I go home, take off my uniform and get back to work,” he jokes; but this is no exaggeration. For five days a week he works from early in the morning to well into the night, handling the everyday running of the shop. Following this he begins filling out the days paperwork which doesn’t end until 10pm. After waking up at 4 AM he repeats this process.

As he reveals this I can’t help but wonder how he is so relaxed. Not only does he have to navigate his stressful work life, his weekends are spent studying at university; and he enjoys it! He perceives the added workload as a recognition of his considerable value whilst his educational pursuits provide a personal challenge. I ask him what motivates him to be so industrious and his reply was short; “my parents.” Both his mother and father are retired in his native Philippines, where his siblings also reside. Every month he remits as much money as possible to support them. However, he feels no pressure to provide. He stresses that these monthly displays of generosity are completely voluntary. He uses these payments as a means of showing his “respect and love” to them. “Yesterday I made another payment, so I think they love me a little more right now!”

Daniel moved to Dubai after working in Saudi Arabia for 3 years. There he learned how to speak Arabic, how to run a coffee shop and how much Middle Eastern countries differ. He believes that the UAE is always “one step ahead” of their rivals and describes Dubai as “a work of art – it’s as if someone created this place with a paintbrush.” He gestures towards the skyline and marvels at the pace of development.

Clearly, his knack for shouldering responsibility is at the core of who he is. He accepts the burden of his work, education and providing for his family. His life choices are no different. He saw no reason why Dubai would be free of prejudice. Consequently, he refuses to begrudge any limited prospects he may face. It was his decision to come here. It is also his decision to leave.

He has passed his university exams, processed his paperwork and is imminently moving to Canada. There he will become the official manager of another coffee shop. His salary will increase and so will his generosity toward his family; but this is just the beginning.

Daniel’s grand ambition is to start his own company, perhaps a food service. There he can hire his siblings, support his parents and take complete ownership of his work ethic. He would finally be able to be his own boss. This vision of his becomes clearer and with each passing day and draws closer with each sleepless night. I have no doubt that soon it will be his reality.

 

 

 

 

 

UAE – Home of the expat

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The United Arab Emirates stands as an attractive place to live for many reasons. It’s innovative approach to business, it’s technologically forward outlook, the tolerance and respect for different cultures and religions and the demand for labour from all sectors of industry has meant the country has become a beacon to expats across the world.

So successful has the UAE been in attracting people from elsewhere that the local population has been dwarfed by the huge number of expats flocking to this glittering oasis in the GCC. The Emirati population stands at just over 11% of 9.5million, the total population of the UAE.

Within the expat population, the largest nationality group is Indians, making up over 27%, next is Pakistan 13%, Pakistanis – 12.69, Egyptians – 4.23%, Filipinos – 5.56 % and Others – 38.55 (Bangladesh, Uzbekistan, Krygstan, etc.). Western expats account for approximately 8.5% of the total.

As the figures highlight, a significant proportion of the expat population are from South East Asian countries. Many have come here to work in low skilled, manual work in sectors such as security, construction and transport. These roles are often low income, however, the workers are earning more than they would do in their home countries and many are supporting other family members in their native lands.

Whilst the expatriate labour force is a much-needed source of strength to the UAE, providing a considerable amount of spending power between them, inevitably, due to family support needs, there is also a vast outflow of funds back to home countries.

The number of remittances jumped 17% in Q1 of 2018 to AED 43.5 billion and approximately 70% of these transfers were done through money exchanges.

Indian workers led the remittances with Dh16bn, followed by Pakistanis, Filipinos, Omanis, Egyptians, Americans, British and Bangladeshi expatriates.

With the considerable sums involved, remittance payments are a rich source of income for exchange houses, but this way of transferring money comes with its own problems for expats. Problems such as difficulties in accessing the physical exchanges themselves, working out the optimum time to do a transfer and avoiding fees are all faced by expats when they need to send money.

This is where FinTech companies can have a hugely positive impact on people’s daily lives. The replacing of cash transfers with digital ones will reduce costs and save time both for the senders and recipients. Creating a system that allows financial inclusion for the low paid will mean greater benefits for the entire financial system.

Giving the ‘unbanked’ access to proper financial services that suit their requirements will have a significant impact on society. It makes a difference to social mores such as equality, employment and GDP. Furthermore, it also lessens the use of cash in society which reduces costs across the board, from shopkeepers to governments. The less notes and coins in use means less money governments need to spend to produce them. Reducing the use of cash can likewise help to prevent fraud and illegal activities. Digital payments are much easier to track and scrutinise than cash ones are.

Lack of awareness amongst the low paid and low skilled workforce is often cited as a hurdle that needs to be overcome. However, the UAE has one of the worlds highest smartphone penetration rates in the world and therefore, access and use of digital devices is not a stumbling block, even among the migrant workers.

By creating favourable conditions for FinTech companies to develop and grow, the UAE will provide a financial lifeline for those who need it most. The country stands to gain enormously by giving its expat population the opportunity to participate fully in the financial sector and go digital.

What does it take to be Dubai’s most requested beautician? – Part 2

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In this edition of “a day in the life”, we revisit Dubai’s most requested beautician.  Last time we heard her story we learned of her day-to-day life in Dubai. This time, she tells us about future plans and experiences in her native India.

 Last time we caught up, you told me about how you came to Dubai and your family. How was your summer and what are you looking forward to now?

 It was fantastic to go home and see all our family. Usually we go for around a month, but this time we only went for two weeks.

Do you have less vacation time this year?

No, it’s the same as usual but this time we’ve split it into two blocks. We’re going back in January as well as my sister got engaged, so they’re having the wedding at home in our village which we’re all really looking forward to.

Awesome! Is he also from India or will his family have to travel to yours for the wedding?

My sister and I are from a tiny area in the North of India. There aren’t many people from there living in Dubai.  Amazingly her fiancé is from the next village, and they didn’t know each other at all before meeting here in the UAE.

What an amazing chance.  So are you now spending a lot of time planning and looking at things she needs for the wedding?

Yes, there’s more choice in Dubai so she’s getting things like shoes here and we’ll be dragging them all back!

That’s good of you! Is it easy for you to get home? Is there a direct flight?

Unfortunately not – it’s a four hour flight from Dubai to Delhi, then another four hour domestic flight from Delhi to near where we live, and then someone has to pick us up and drive another hour.

Ouch. Sounds a bit like the journey I have to make to visit my parents! Could you take a train from Delhi instead?

Don’t get me started on the train! When we first decided to move to Dubai, we didn’t have enough money for the domestic flight, so we took the train to Delhi. It took SIX FULL DAYS to get there. You don’t have anywhere decent to sleep, just a seat. And you and your friends can’t all sleep at the same time, because people will rob your bags, or worse. The train is really dangerous in India, and because it’s always moving, it’s hard for the police to catch the criminals. Honestly, I would rather not visit at all than have to take the train again. I tell everyone who is planning to visit not to take it.

OK, so you definitely don’t recommend the train! Will anything else change when your sister gets married – will she leave?

No, they’re planning on staying here in Dubai. They haven’t decided what to do about living arrangements yet. If she moves out of our current place it’s fine, I have a lot of other friends where I live– mostly from Thailand as we like to cook the same sort of things. I think life will stay pretty much the same.

What does the future look like in terms of work for you?

Work is good, I’m always very busy! The salon is launching a microblading service very soon, so I’ve been training for that. I’m really looking forward to doing something different and expanding my skills. Even back in Northern India people are starting to be very interested in this service so it’s great that I will be able to do it. If I ever want to go home I think I’ll have lots of clients!

Trials, tribulations and training

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Meet Ishara. He currently runs the café at the heart of a fantastic martial arts gym in the UAE. He is not hard to miss. His large frame and imposing physique is in complete contrast to his ever-present smile and friendly nature. He moved to Dubai from his native Sri Lanka in 2016 for an unsurprising reason; to improve his salary and support his family. However, what is unconventional is his lifestyle.

He may be a passionate bodybuilder, but he has absolutely no interest in martial arts. “Martial arts just look too hard”, he jokes. However, his daily routine is all that is needed to show his mental strength. For 6 days a week he works 9 ½ hour days. Where most people would consider another pastime, he persists. From 11 PM until 12:30 AM he lifts weights. When he gets home he sets his alarm for 6 AM to repeat the day. He acknowledges that his habit of sleeping 5 hours a night is nowhere near enough time to recover from his intense workouts, yet he looks well rested with youthful features. I am shocked to find out he is 30. “Do you want to know my secret for looking young?” he asks me. “Well this is it” he says as he gestures towards his large bag. It contains the food he has prepared days in advance. I find his dedication remarkable. In the two hours between finishing work and going to the gym, the only time that he can relax, he spends cooking.

Training clearly means more to him than just physical fitness. It seems to be the only way he can cope with the stress at work. “I need some help”, he confesses. Currently the gym is understaffed, and few have been affected more than Ishara. It is 5 pm, the only time we can talk. As soon as 6 pm arrives the gym becomes swarmed by the regulars and his services are in high demand. Whether it be preparing food, making shakes or cleaning the kitchen, he is almost always occupied. Furthermore, there’s currently no one to share these responsibilities; and he doesn’t have time to take a break.

His honesty pierces through during this conversation, yet he reveals that he is often untruthful to those who matter most. He compensates for not being able to see his family by speaking to them often; but he ensures that the details of his personal struggles remain hidden. “I don’t want them to worry about me” he explains. Although his fibs are out of character, they are completely understandable. Having his family worry about him is apparently the one form of anxiety that overcomes his resilience. I can’t help but wonder whether he feels a sense of relief by being unable to go home. He may be sleep-deprived and overworked but his parents feel proud of his fruitful move. As the oldest of four children, he tries to support his family by remitting as much as possible, but lately payments have been less frequent. He explains that his living expenses such as travel, housing and food are taking its toll. “I try to send as much as I can but sometimes it’s just not possible.”

His determination to continue his hectic days is a must to fulfil his long-term ambition; starting his own business in Sri Lanka. His work ethic and tenacity are undeniable. What he lacks is management experience; a shortfall he is looking to perfect in his next job. I have no doubt that any future employer would be overjoyed with his effort and enthusiasm.

 

 

The poverty premium: It costs more, to be poor.

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Put simply, the poverty premium is the principle that people on low or zero incomes pay more on the essential costs of living than wealthier people.

Despite working in a business entirely centred around financial inclusion (providing access to the digital economy for those usually unable to afford it) I have only recently begun to investigate the true reach of the poverty premium’s grasp: across almost all areas of our economy.

At a basic level, the poverty premium is predominantly dictated by economies of scale. Purchasing in bulk or from hypermarkets usually affords the buyer some kind of discount.

Why would you buy the rice from the convenience store? Perhaps it saves a trip in the car. If you fall into the middle or upper financial segments, this is likely. But for people on a lower income, around 70% of the UAE population, buying a small amount is all they can afford at one time. But they get less rice, dirham for dirham, than those who can afford to buy in bigger quantities or hypermarkets they can reach in their cars.

According to University of Bristol, the lowest income UK families pay nearly AED 4,000 more per year than their middle income counterparts for basic amenities. Costs are driven up by having to pay to access money (same in the Gulf), increased insurance costs due to living in dangerous areas, and paying for utilities in inefficient ways such as pre-paid meters, kiosks and gas bottles (again, same in the Gulf).

Working in the remittance industry, I am acutely aware of the costs people without access to the digital economy face compared with those who are banked. People from smaller countries such as those in Africa pay up to 30% of their transfers when paying cash at the counter. Those who can send them online would pay less than 5%.

Finance, access to credit, insurance – this is just the obvious stuff. The poverty premium extends way past finance or even groceries.

The UAE’s recent ban on Skype has, as a nation of expats, affected most of us. Free calling home made living away from loved ones that little bit easier. Many have already found VPNs are a way to circumvent this ban. VPNs are not only illegal in the UAE, they are prohibitively expensive (around $100) for those who have a monthly disposable income of around $200 (AED750), and often too complicated for people with an elementary grasp of technology to implement anyway. Middle and higher income people may choose to pay this one-off VPN cost, but those on the lowest incomes must instead pre-pay for what phone credit they can afford and then spend that credit on premium international calls. Much like inheritance tax, the poverty premium is not afraid to tax the same funds repeatedly.

Have you noticed that in the last decade, the cost of “luxury” lifestyle goods – think televisions, Playstations – has depreciated, whilst the cost of life’s basics – food, healthcare, transport – has exploded to ruinous levels? The poverty premium doesn’t apply only to people living in absolute poverty like Somalia. This new type of poverty continues to hit those living in precarity in America, the UK and even here in the UAE.

So how are we addressing the poverty premium? Despite the attempts of universities and charities, it receives little attention from policy makers. Better to look at something you can influence far quicker. Technology. Technology is the ultimate equalizer.

Skype ban excluded, technology is bringing the power of choice to anyone in possession of a smartphone. The UAE has a 98% smartphone penetration level. If you are still in any doubt of lower-income people’s capacity to operate a smartphone (we still hear this a lot), please look at this recent image of the NOW Money team delivering dates during Ramadan.

Looks staged, doesn’t it? It isn’t. These people are ready and waiting with half our economy’s purchasing power. The “new” ideas aren’t really new – after all, they are just selling things, renting things, delivering things. But the way they can be paid for and consumed – online, rather than expensively at the closest shop, brings a whole new dimension to accessibility and pricing.

The reason for financial inclusion isn’t just providing people with a safe place to keep money (albeit, that’s a good one). We have bigger plans for NOW Money and its ability to bridge the gap to other platforms: ecommerce, apps, even drones. These are just at the start of the journey to financial freedom for society’s most challenged. And for the creators of these platforms, your market just got a lot bigger.

 

 

A long way from home…

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Meet Dennis. He works as a concierge but his purpose to his family is far more important.

After moving to Dubai in 2016, Dennis is in the final year of his contract and is counting the days until his return to his native Uganda. His positivity is infectious, and it is a rare occasion to see him without a smile, but I quickly learn that he often feels low whilst working in this towering building. His joyful demeaner dampens as he explains his mother’s illness and the medical expenses that have accumulated. Despite being the youngest of his three brothers, he bears the sole responsibility of providing for his mother back home because they face their own financial troubles.

I asked him what he misses the most about home and his reply was simple, “freedom.” He explains the laidback lifestyle he used to enjoy where he had no formal working hours, or even a job title for that matter, but was still able to live comfortably. Some days he would sell clothes and on others he would work on a farm if he so desired. He used to wake up with no boss, no stress and a level of independence someone with my background can only begin to imagine. He recalls how on the weekends he could afford to buy a new set of apparel by selling the clothes off his back, an unconventional trade by our standards but commonplace for him.

One thing he loathes is the inherent “laziness” of his life here. He shows me a picture of himself when he was in Uganda and the difference is staggering. He now cuts a slim figure but just a few years ago his physique was that of a bodybuilder despite never setting foot in a gym. “In Uganda life is the gym, work is the gym. I never had to pay someone to let me exercise!” He goes on to joke that being a doctor in Uganda is a difficult business because few people are sick.

Unfortunately, one of those people happens to be his mother, hence why he sacrificed his content life to move to Dubai. He now works from 7am-7pm, a stark contrast to the carefree life he used to live. His weekends consist of napping and very little else. He jibes that it takes him 3 days to watch a single movie because he inevitably falls asleep, recovering from his long working hours. His anxiety over his mother’s health is exacerbated by the fact he gets paid at the end of the month. “If an emergency happens in the middle of the month and I can’t send money…” he trails off dreading the worst before his beaming smile re-appears.

The discrimination he faces is deeply saddening. He tells me of the tension between himself and his Asian co-workers. The perception is that he and other African’s have come to steal jobs and there is no way for him to challenge this hostility.

Dennis, who has a degree in management, tells me something profound; “workers like me are not just the first face you see in a company, we are the face of this country. Without us nothing here would work so we should be respected like regular people.”

These tribulations have often caused him to think of quitting. Nevertheless, he dismisses these thoughts as weakness. He would consider himself a failure if he quit and abandoned his duties so remains hopeful, determined and patient. “Part of being a man is surviving these struggles”, he proclaims.

Although he must spend another year away from home, he continues to smile whilst toiling, knowing he is doing this for his family.

Missing 10 years of your child’s life; is it worth it?

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Nasir emigrated to Dubai from Khyber Pakhtunkhwa, a scenic area of northern Pakistan which is surrounded by snow tipped mountains and greenery. He made the decision to come to Dubai after his older brother told him that there are many opportunities for employment, and also many other Pakistanis.

After arriving in Dubai, he found a job as a gardener for a landscaping company which caters to one of the many gated communities in Dubai. This was in 2008, and since then he has been back to see his family four times. Nasir talks fondly about his three sons who are back in Pakistan, and is always amazed by much they grow in between his visits. His eldest son is now eighteen years old and is also looking to come to Dubai soon.

Nasir works nine hours a day, six days a week and moves from house-to-house using his bicycle. He lives in company-owned accommodation where he shares a room with one other gardener of similar background.  At the beginning and end of each day the company bus transports Nasir and the other gardeners to and from their accommodation in Al Quoz.

In general Nasir enjoys working in Dubai, especially in the winter. During the summer his hours are decreased and he longs for Friday – his day off. He spends his day off at the Mosque, followed by the cafeteria near his accommodation.

Almost all of his monthly salary is sent back to his family and he survives on as little as he can in Dubai. Like many migrants in the UAE, he does not have a bank account. Nasir’s dream is to start a modest car sales business and bring his whole family to Dubai. One day, he hopes to save enough money to move back and live comfortably in Pakistan – although with his current banking situation, or lack thereof, he has scepticism as to whether he will achieve this.

Written by Emaad Alvi.

Working 7am-7pm, what a way to make a living

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In the second blog post of the Real Life Stories series, we hear Third’s story.

Why is he in Dubai? How does he spend a typical day? What does he do with his money?

Life isn’t always easy, but with an end goal to focus on, there’s light at the end of the tunnel.

Third’s story

Danilo III, or “Third” as he likes to be known, has lived in Dubai for four months, where he moved to from the Philippines. He works as a concierge for a building management company.

Just like most migrant workers in the UAE, Third works six days a week for 12 hours a day, 7am until 7pm. A typical day starts with an instant coffee before the bus ride into work. He lives in Al Quoz, and his accommodation is a long distance from the metro, so he has to share a bus with the colleagues he lives with (he shares a room with several other men). Work is 10km away so walking isn’t an option, especially in the summer when the temperature is known to reach 50 degrees Celsius.

After the bus journey, Third gets to work where he spends the day dealing with the visitors, tradesmen, and office workers in the building. He enjoys his job, there’s lots to do so he’s always busy and especially enjoys getting to know the residents of the building and hearing their stories every morning. He greets everyone with a warm smile, which is bound to brighten up even the dustiest of days!

In the evenings, Third generally does some grocery shopping or his laundry or other household tasks. When possible, he meets up with his wife, which is usually around three times a week. He met her in the Philippines, and they moved over to Dubai together, however they have to live in separate accommodation because they work for separate companies. She works and lives at the airport, which is 25km away from where Third lives in Al Quoz. As you can imagine, being newly weds and living such a distance away from each other with minimal public transport isn’t ideal. They both have the same day off each week, which they spend wandering around Deira City Centre Mall (but not buying anything…).

Third and his wife moved to Dubai to save money and make a better life for themselves, as well as to send money to their friends and family back home. Their first goal is to save enough for a proper Church wedding, as they only had a small affair at home. Then they would like to rent a flat together, so they can settle down and end the current separation. Third is also putting away a little bit of money each month for when they decide to have a baby.

Access to an online account means they could manage their finances and keep their money securely in an account (rather than in cash format stored in shared accommodation). The life Third and his wife wish for is within reach. The money to be made in Dubai is far more than they can earn back in the Philippines, which will in turn open up more opportunities for their future family. Giving Third and his wife access to banking and cheaper remittance could bring their dream wedding and life as a family one step closer.

What does it take to be Dubai’s most requested beautician?

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In this new “day in the life” series we have interviewed low-income migrant workers around Dubai to understand about their lifestyle, why they’re here and their prospects for the future. Today we speak to a beautician from India.

How did you hear about working in Dubai?

My sister and I both trained to be beauticians in India. My sister heard you could earn more doing the same things in Dubai, and her friend helped her to get a job working for one of the best salons here. A year later, I followed her to work for the same company.  Eight years later, my sister and I are still here.

What’s your schedule like each day?

I work 12 hours a day, usually 10am to 10pm. I’m the top requested person in the salon so I usually have a full day of appointments, mostly waxing. I can do all treatments but people say it’s not painful when I wax them, so that’s the top thing I get booked for! My clients are very loyal- I know them well and enjoy chatting to them, so the day passes quickly.

Do you get to see your sister much? How do you spend your time?

We share an apartment in Al Quoz provided by our company. We work in different salons but the company makes sure we get the same day off, and we travel to work on the same bus. We’re usually tired by our day off, so we’ll sleep in for a while! We try to go to church every other week, and we go to the mall, or the cinema.

What’s your company like to work for?

We work hard but we are loyal to the company because they are loyal to us. Like tomorrow we have a party, which is Great Gatsby theme. We’ve all got new shiny dresses. There will be around 500 people, which will be a lot of fun.

How often do you go back to India to see your family?

We get 30 days of leave each summer, sometimes more if you worked overtime in busy times like Eid, Christmas and New Year. Usually my sister and I go back to India, but this year, we brought our parents to see Dubai instead. It was hot but they loved it. We went to Dubai Parks, saw the Burj Khalifa and Dubai Mall. They’ll come back.

Do you send money back to your family every month? Can you afford to save money for yourself as well?

Yes, we’re supporting our parents and younger brothers through university. One of our brothers might come to Dubai if he can get an IT job when he graduates. I don’t always save for long things like a house…. I have paid for myself to get other things I wanted though, like orthodontic braces! Haha.

Will you move back to India eventually and settle down?

When I first came to Dubai, I thought it would just be for two or three years, but now I’m not sure. It’s lovely to visit home, but the people there haven’t left or explored the world much. I think I’d get bored living at home now I’ve been independent in Dubai all this time; I’ve changed. My parents want me to choose the person I’ll marry and I don’t think the right guy is there at home for me. My sister met a guy in Dubai and I think they’ll get married and stay here. Maybe one day I will too!

UAE VAT for FinTech companies explained

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Everyone who lives in the UAE knows that on January 1, 2018 value-added tax (VAT) will come into effect. There is a lot of talk, and furthermore, uncertainty, with the date just around the corner. When it comes to the impact that this will have on the world of FinTech – the uncertainty just goes over the top!

As a result of my experience with both VAT and FinTech, I thought I’d write a post about the issue, and address the main points of uncertainty.

Most people will be familiar with VAT in general, but if not, you can email us to view the presentation from my last ‘VAT in the UAE training’ here that was organized by Astrolabs on the 29th of October, 2017.

So what is a FinTech and what attributes does it have which make VAT treatment so vague?

According to Patrick Schueffel, in his paper, Taming the Beast: A Scientific Definition of Fintech in the Journal of Innovation Management; “FinTech is a new financial industry that applies technology to improve financial activities. FinTech is the new applications, processes, products, or business models in the financial services industry, composed of one or more complementary financial services and provided as an end-to-end process via the Internet.”

Based on the definition above, I have come up with some unique features of FinTech companies, and what VAT complications they may face:

1. Provision of financial services

Financial services in relation to VAT is still a grey area in current VAT legislation. However, as draft cabinet decision on the Executive Regulations of UAE VAT law says, if the financial services are performed NOT in return for an explicit fee, discount, commission, rebate or similar, then they are exempt for VAT purposes. However, if the services above are performed for a fee, discount and commission, etc., then they should be taxed at 5 per cent to the extent of the amount of that separately identifiable charge. For example, the remittance operation itself is exempt from VAT however the fee that is charged by the financial institution is not. Therefore, there will be 5 per cent VAT added to the amount of the fee, but not to the amount being remitted. The last point – agreeing to do, or arranging financial services as per current UAE legislation also counts as the provision of financial services.

When it comes to the recovery of input VAT, tax incurred on costs wholly attributable to the standard rated supply of financial services can be fully recovered; and VAT incurred on costs in relation to exempt supplies – cannot be recovered. Therefore, companies should accurately distinguish which costs are attributable to the financial services that are exempt, and which are taxable supplies. If the company has both, then the following ratio should be applied:

Taxable supplies/Taxable + Exempt supplies

For more guidance on this, please have a look at the guidance published by the federal Tax Authority here.

2. Provision of services digitally

Another feature of a FinTech company, is the digital provision of its services. For this we have to be familiar with the place of supply concept, because if the services are provided to someone outside of the UAE, VAT is not applicable, and vice versa.

The place of supply for the goods, for instance, is where the goods are. When it comes to digital services, the provider has to know who is the recipient – whether it’s a company (B2B) or an individual (B2C).

In a B2B scenario, the purchaser is responsible for accounting for the invoice in accordance with a rule known as the reverse-charge mechanism. The purchaser accounts for the VAT of that invoice as an Output VAT (sounds strange but that is the way) and Input VAT at the same time, meaning there is no VAT liability, only reporting of the transaction.

With B2C, the scenarios are as follows:

3. Fintech companies registered in Dubai International Financial Centre and other free zones

There is a lot of talk around free-zones and how they are going to be treated for VAT purposes. The latest draft regulation says that if the company is registered in a designated zone which is a fenced free-zone, then it is considered as outside of the UAE VAT scope. If the free-zone is not fenced – like DIFC – then general UAE VAT rules apply.

I hope the above helps shed some light on VAT treatment for FinTech companies who, just like us are trying their best to navigate in this complex business world.

Please feel free to leave comments if you have more insight on the VAT situation described in this post, or any questions.