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Ditch That Rent Check: A World of Online Payment Options

Posted on 28. Jan, 2010 by Jim Semick in Business

Sure, the lowly check will be with us for a while. But that doesn’t mean that you can’t help send checks the way of the dodo bird. According to a Federal Reserve System study, check usage is in steep decline, and checks now represent only 30 percent of all non-cash payments. Electronic payments are now the clear winner with consumers.

But for many property managers, checks continue to be business as usual. If you are like most property managers in the U.S., you have explored online payments, but have not made them a core part of your operation. Even if you have implemented check scanning, there is a cost to every check you handle – moving more of your resident payments online can save your property management business time and money every month.

If you haven’t yet made the move to electronic payments, ACH and Credit Cards are great ways to go checkless. There are many services that can help you implement a solution quickly and begin offering online payment options to your residents.

ACH (Automated Clearinghouse)

ACH is an electronic funds transfer from the resident’s checking or savings account to your operating account. Residents pay their rent directly online or through a transaction that you initiate. You typically receive funds 48-72 hours after the resident pays. You can get ACH processing from many payment processing companies or directly from your bank.

If you get the ACH service from a payment processing company, the resident (or you) pays a convenience fee typically ranging from $1.00 to $3.00. The advantage of picking up the tab is that you get more residents signing up for the program, and thus greater savings for you by handling fewer checks.

Online payments shouldn’t be expensive however. You can find solutions with a low transaction fee structure and low monthly fee. Another important factor in your decision: Your payment solution should seamlessly integrate with your accounts receivable system. Any savings you get from online payments will be wasted if you are stuck entering payments by hand into your system.

Your bank can offer you ACH services at a low cost, but the hassle and time implementing this yourself will reduce any savings you might realize. You will need to have a software solution that can create an electronic file in the correct format and then upload that file directly to the bank for processing.

Credit Cards

There are a variety of ways you can use credit cards in your operation. Many property managers accept cards for deposits and application fees only, while others will gladly accept them for rent.

The challenge with credit cards is the high transaction fees that must be paid by you or the resident. For rent payments, these fees can be significant, running $10 to $30 or more. A resident who is faced with a steep late fee from you may gladly pay the credit card fees instead.

While you can become a credit card merchant and process the payments directly from your office, the easiest way to accept credit cards is to partner with a service that will administer the program and collect the transaction fees directly from the resident. These services will often offer an online portal for your resident to pay directly online.

Of course, the check will be with us for the foreseeable future, but there are many options that can help you streamline your process today and reduce the pain of rent week. The choice you make depends on the options you want to offer your residents, how much you want to pay for offering that convenience, and whether you want your operation or the resident to pick up the cost.

Jim Semick is the Director of Customer Development at AppFolio where he is responsible for software market development, new property management software technology, and working with property managers to provide input into the AppFolio Property Manager product.

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Tags: Accounting, business, electronic payments, Technology