The essential considerations of the apartment business are occupancy and rent rates. But these are of little value without the technology required to receive payments conveniently and fast, log them accurately and fast, and have those monies deposited and settled—fast.
The good news is automated payment processing technology is evolving to such an extent that residents and property managers have multiple options available to them. The bad news is few renters are availing themselves of these options. According to the National Multi Housing Council (NMHC), 76 percent of rent payments are in some form of check, with just 22 percent by either credit card or Automated Clearing House (ACH).
This lag in adoption isn’t because communities themselves are behind the times. NMHC says 81 percent of apartment companies do offer online payment solutions, but only 18 percent of payments are made by credit card or online portal.
“The focus has to be on changing behavior,” says Leslie Olsen, director-product management and marketing with payment processing company PropertyBridge. “Communities need to not only offer the technology, but also to employ incentive programs and expertise to move people to automated payment options.”
The advantages of automation are palpable: increased flexibility, options and convenience for residents, and greater efficiencies for communities and their property management systems.
“Apartment communities are trying to reduce overhead and increase efficiencies,” says Andrea Tucker, product management for NWP Service’s Resident ePay software product. “One of the biggest time-consumers is processing rent.”
On the go
But there are alternatives. Many property management software companies offer online payment services, and there are dedicated automated payment processing providers. Typically these come complete with Janus-like online portals, with residents on one side viewing their payment history and options via the Internet, and property managers monitoring and managing all payments on their side of the digital divide.
But many of these systems allow for more cutting-edge approaches, if a community is willing to offer them. For example, between the iPhone, Blackberry, and Android devices, smartphones will outnumber personal computers shortly, research firm Gartner predicts. Some of the software vendors already support mobile connectivity to payment portals, most commonly with a smartphone app. More are sure to join.
“Most people believe that 20-somethings would be high mobile-device users for payments, but it has nothing to do with age,” says Tucker. “Rather, it’s about having a sophisticated phone.”
Another use of mobile devices that may see some traction in the multifamily market is Near Field Communication (NFC) technology. Somewhat along the lines of a smart card and reader setup, the resident would swipe a phone over a reading device and, with the phone linked to a bank account, make a payment. Phones also could be loaded with credit and used in the same way, much like a pre-paid money card.
Two online options familiar to Internet purchasers are PayPal, a payment intermediary service that funnels funds to the community while debiting the payer’s bank account, and Bill Me Later, a PayPal subsidiary that allows online payment without a credit card (the payer then pays Bill Me Later—later). With today’s Internet-savvy younger renters already used to PayPal, it could be considered a comfortable, and appreciated, option.
Even more familiar are payment kiosks such as the ones offered by Kiosk360.com and others. These stations function much like ATM machines, with full transactional capabilities and account visibility. Add one to a leasing office, and it can pull double duty as a marketing tool, complete with floor plans and amenity videos.
And then there are options designed for the non-technical payer. For the inveterate check writer, check-scanning machines can create digitized checks that banks receive and process electronically. With these so-called “substitute checks,” apartment companies could benefit from faster settlement; monies typically clear the same day or overnight, compared with ACH system time frames of three to five days.
Don’t accept paper
For the completely unbanked resident, the old system of money orders has been a fallback—and a processing headache for apartment companies. PropertyBridge, by virtue of its acquisition by MoneyGram International in 2007, was an innovator here in allowing residents to pay rent in cash at some 40,000 MoneyGram locations.
“The real way to drive this payment type is to no longer accept money orders in the office,” PropertyBridge’s Olsen says. NWP’s Resident ePay provides a solution for cash rent payments at over 45,000 Western Union locations which can be found at a variety of locations such as Walmart.
RealPage Inc. also is developing a cash-payment system in partnership with Walmart. When fully operational, residents would be able to make payments at any of 16,000 Walmart locations, and have it electronically posted to a community’s ledger. The resident walks out with a receipt.
Kimberly Lang, vice president-payments with RealPage, says this service would be a big boon, since money orders comprise 22 percent of its payment volume. She estimates that there are 40 million unbanked people in the U.S. today, a disproportionate number of whom are renters.
“There’s room for a lot of improvement in the industry in [terms of] the penetration of automated payment technology,” Lang says. “Communication is the most important thing here. If residents don’t know they can go online to make a payment, they’ll just go back to writing paper checks.”
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