Payment Processing, Present and Future
- Dec 05, 2012
When it comes to payment processing, mobility is just one of many drivers shaping how owners/managers are doing business. Many are offering more ways to pay, striving to eliminate paper wherever possible, opening rent-payment kiosks at retail locations, seeking to incorporate greater security into payment systems and striving for ways to make the process more cost effective.
There’s no doubt the industry has embraced mobile as an increasingly popular way to provide payment. Residents are alerted to payments due by text messages or mobile-friendly apps, and rents are drawn from their checking accounts through Automated Clearing House (ACH) transfers and other means.
Mobile is so big it’s no longer a trend. It has transcended that term, says John Pendergast, senior vice president of client services with Santa Barbara, Calif.-based Yardi Systems. “The mobile population is not growing or increasing. Today, everyone is walking around with their smartphone or tablet,” he says. “If you’re preparing now to serve a mobile population, you’ve missed the boat.”
Checks for the 21st Century
In more emergent stages are innovations on payment’s back end, which were made possible by the Check Clearing for the 21st Century Act, or “Check 21,” says Seth Harlem, vice president of partnerships with New York City’s Zipmark.
The federal government opened the gates to payment innovation, especially as it affects billers such as property management companies, with the passage of the act in the early part of the last decade, according to Harlem.
“Check 21 rules are what allow billers to scan paper checks and create a digital version that carries all the same guarantees as the paper artifact,” he says. “And there’s a great deal more that Check 21 enables. Zipmark, for example, has developed a 100 percent digital check payment platform that completely eliminates the need for a paper check. The Zipmark software creates the check image that carries the same legal benefits as a paper check.”
Yardi, offering online and mobile payments from any mobile device via its RENTCafé Portal, offers a check scan routine separate from RENTCafé.
“You in the property management office run the check through a scanner, and we at Yardi capture an image of the check’s front and back and shoot it to the bank,” explains Pendergast. “The bank treats it just as a physical check.”
NWP’s payment-processing product, Resident ePay, provides a platform whereby payment can be made through multiple channels: online, mobile phone, voice response, in-person and scanner, says Cindy Style, Bloomingdale, Minn.-based product manager for Resident ePay with Costa Mesa, Calif.-based NWP.
“Through those channels we provide multiple payment methods, [including] ACH, credit and debit cards, money orders, checks and even cash via Western Union agents,” Style says. “Our goal is to provide greater access for residents and improve the receivables process for our customer properties.”
Another notable payment processing trend is kiosk-oriented rent collection. Some property management companies are opening kiosks at larger retail chains like Wal-Mart. “If you’re going to Wal-Mart this Saturday, you can write your rent check right there,” Pendergast says. “That kiosk service knows how to funnel the funds back to the correct property management bank account and how to send it into the company’s software system.”
Lower transaction costs
Reflecting on a payment innovation conference called “Money 2020” he just attended in Las Vegas, Harlem reports the leading topic among the 2,000 payment professionals at the conference remains mobile technology. “It’s difficult to forecast what transaction triggers, such as digital wallets, will take the lead,” he adds.
“For example, only time will tell whether the hype around near field communication (NFC) in payments will amount to significant adoption.” However, the conference made clear to Harlem that the key beneficiaries of payment innovation in the years ahead will be, first, the unbanked and under-banked among renters, and second, the companies accepting payments.
“There is an ever-increasing focus on enterprise payments, [meaning] the developments in payment processing will continue to reduce overall transactional costs and increase the number of payers paying electronically,” he says.
“Businesses should not have to pay a two or three percent transaction fee simply for getting paid … I’m certain the pain businesses feel related to payment processing will be the leading driver in payment innovation.”
Like Harlem, Style is convinced that the future will favor less costly payment methods. “We expect to see greater emphasis on the least expensive means of payment processing, ACH and PIN-based debit cards,” she says.
Also look for increased focus on security to battle credit card fraud, Style says. Resident ePay, for instance, doesn’t store credit card information on its servers or applications. Card numbers are stored with its credit card processor, and Resident ePay stores a reference number or token tied to that credit number for security purposes. Style foresees expansion of “tokenization” in years ahead.
Chip-and-PIN technology, currently more widely used in Europe, incorporates a chip in the credit card that is read by a different type of reader and requires the user to enter a PIN. It helps ensure a more secure transaction than magnetic strips can deliver. “I would anticipate that eventually, Chip-and-PIN technology will be part of online payments for security purposes,” Style predicts.
Pendergast foresees a decline in the prominence of the management office as payment processing evolves. “I would be guessing, but I think we’ll see the availability of the leasing office waning,” he says.
Historically, he notes, an apartment resident sat down at the kitchen table, wrote a check, and walked it to the manager’s office for an in-person handoff. Today, Pendergast observes, “managers want the residents to pay online, because they don’t have to do anything. The availability of the property manager’s office to accept checks will wane over time.”