When Mountain View, Calif.-based PayNearMe launched a service that allows residents to pay their AMS Billing Services utility bills in cash at 7-Eleven’s around the country, it was easy to make assumptions about the service's targeted clientele.
PayNearMe CEO Danny Shader acknowledges that some of users could be day laborers. But by no means is it everyone. He also thinks second shift workers and people in the restaurant industry maybe coming into 7-Eleven in odd hours to pay their rent
“There are a number of misconceptions about this [cash] market,” he says. “Yes, there’s an immigrant population. But you’d be amazed how many people are overdrawn or maxed out in traditional banking and use alternative financial services to go around the banking system. This is not a great economy and banking has become expensive.”
Shader isn't alone in seeing these opportunities. Walnut Creek, Calif.-based RentPayment.com has an agreement with MoneyGram to allow residents to pay rent in cash. “All of the management teams that we’ve talked to are interested it that because they’re [tired of] getting cash,” says Bill Evick, the company’s vice president of sales. “Because of the economy a lot more people are paying in cash.”
But some people contend that best-in-class owners still can eschew cash payments. “It [taking cash] is not in Archstone or UDR’s wheelhouse or anyone like that,” said one apartment executive.
Neil J. Rosen, owner of NJR Real Estate Consulting Services, an asset management consultant in Virginia Beach, Va., agreed. “In Class A properties, residents have a different profile,” he says. “They want to pay by credit card or they want rent taken out of their account.”
Regardless of who the target demographic may be, companies like PayNearMe might play a valuable role. In its system, for instance, a consumer hands his or her bill, which has an embedded unique barcode, to the 7-Eleven cashier. The cashier scans the code, the resident pays cash, receives a detailed receipt as proof of payment, and property owners and managers are notified immediately that the tenant has paid. It all happens in seconds and the consumer pays a convenience charge of $2.25. PayNearMe splits this fee with 7-Eleven.
Compare that with the process of paying through money order, which often cost $15 or more and are loaded with pitfalls.
“There can be fraud in the money order,” Shader says. “If someone keys in the wrong amount, how to do you resolve the discrepancy? This is easier for every step in the chain.”
RentPayment.com partnered with MoneyGram to offer a cash payment service at Walmart and CVS around the country. Residents get a card with a unique identifier, present the card, and pay their rent for a service charge of $3.50. Typically, it costs $9 or $10 to do this, according to Evick.
“They can pay anything in the resident ledger on the management software,” he says.