Electronic payments becoming the standard. What about for rent?

A recent news article I found in the Wall Street Journal said that this year a select group of Americans will get their tax returns in the form of a pre-paid debit card. This is part of a pilot program of the US Treasury Department to cut the expense of paper checks and also aid the “unbanked population” that do not have bank checking accounts to receive refunds.

This got me thinking about the growing trend in electronic transactions and the idea that ePayments will soon become the standard for all transactions... even for apartment rental payments.

It is clear that the paper check is becoming antiquated. With online bill pay, payroll direct deposit, and electronic rent payment services (such as www.rentpayment.com ), both consumers and businesses are using paper checks less and less. This group now includes the United States Government! But what about person-to-person transactions? Most people still use cash and checks for interpersonal payments such as gifts, yard sales, friendly loans etc… However, new technologies such as Square ( www.squareup.com ), are changing this. Square “enables anyone to accept credit cards anywhere” by using a mini credit card swiper that plugs into a cell phone or an iPad. This revolutionary idea enables person-to-person transactions with a credit or debit card. These solutions make it easy for small businesses or apartment owners/landlords to easily accept ePayments.

Think about how many paper checks you wrote 5-10 years ago, and how many you write today. I’m willing to wager that this number has dropped significantly. As the tail-end of generation Y become adults, familiarity with the internet and electronic transactions is more and more prevalent.

Although the multifamily industry is lagging in terms of adopting ePayments, I think it's not long before the majority of all apartments will have an online payment platform... What do you think?


Tax Refunds Move To Debit Cards, Wall Street Journal: online.wsj.com/article/SB100014240527487...078270017010048.html

I totally agree.

If we look back to less than 10 years ago the McDonalds around the corner wasn't accepting credit/debit cards yet. So it is only a matter of time and evolution until all transactions are electronic and paper is gone forever.
Banks are advancing their bill pay, direct deposit, and money transfer capabilities so it only makes sense the US Treasury continue the progress. Another plus for this progress is that payment processors like RentPayment.com, wellsfargo.com or paypal.com are simplifying the process to make electronic payments and providing users with financial perks to do so.

Completely agree. How often do you see "No Checks Accepted" signs now at stores or restaurants? Merchants know right away if your credit card is denied, instead of having to deal with the hassle of a bounced check.

This could also speak to a the Gen Y culture of convenience (and avoiding face-to-face interactions) - which clearly has negative aspects - as being able to pay rent online means not having to leave your computer to go drop off the rent check and risking passing by your neighbors, and, heaven forbid, possibly having a conversation with someone!

E-payments are finding their way into Multifamily in a few obvious ways with increased use of credit card and ACH transactions. The growing trend toward payroll direct deposit is also on the rise as the industry looks for ways to mitigate risk with conditional acceptance. Bringing all residents into the future with e-pay is the best way to get rid of paper checks once and for all.

We have been encouraging tenants to use electronic payments for some time. Bank checks can be issued quickly and efficiantly. Credit card processing is becomming less and less expensive. If you use the newer version of QuickBooks, there is an application that cost only $12 per month. You can even attach a swipe to your phone.

It's a trend that should be encouraged and can save in time and expense to process and deposit paper checks.

I agree that moving towards electronic payments is a good thing for the industry. The issue is with credit card fees. These can run 2-3%. On a $100 purchase that isn't so bad but on a $700, $1000 rent that adds up considerably. There was a study a year or so ago (will try to find the link...) that showed that only 13% of residents adopted online rent payments due to the associated fees. The number jumped dramatically when the apartment paid the fees for the resident, but then that cuts into profit margin.

I agree completely that epay will be the way of the future. Currently, most of my conventional assets accept credit cards or electronic check drafts, and even a few of my affordable deals have adopted the epay abailability. While Money Orders and Checks are still the primary source of payment, we are seeing an increase in epay each year. Honestly, I dont recall the last time I wrote a check. Everything I pay is eather using my debit card or an echeck draft from my account. Paperless is the way to go, and epay allows you to do so. If you havent adopted the epay plan, then I would highly reccomend you consider it. You will also see a huge drop in your delinquency.