Credit: Philippe Beha

Some day soon, shopping lists across the country will read: Buy a dozen eggs, pick up prescriptions, and pay rent. Or at least, that may be the case at Wal-Mart, says Ryan Gilbert, co-founder of PropertyBridge, a multifamily payment systems provider based in Oakland, Calif. His firm’s acquisition by MoneyGram in 2007 will allow residents to pay their rent at MoneyGram locations at retail stores, including more than 3,100 Wal-Mart locations nationally.

This change would be a departure from the way apartment managers collect rents today. “The concept of paying rent has its roots in feudal times. Tenants would bring a portion of their crops to the landlord so they could stay on the land,” Gilbert says. “That’s the same hierarchical structure that still exists today.”

If Gilbert has his way, though, that won’t be the case much longer. After all, Americans now pay more than half of their bills electronically, according to a report from Emeryville, Calif.-based Joshua Tree Consulting, an industry research firm. That’s why, today, a number of firms are trying to bring the industry’s fundamental transaction—paying rent—into the 21st century. Namely, they’re making it easier for residents to pay their rent online with credit cards or through automatic withdrawals from their checking accounts.

The Last E-Holdout

Part of the challenge to updating the rent collection process is that the industry’s technologies for rent collection, billing, and payment systems are antiquated.

Gilbert estimates that 10 percent of all rent transactions are paid electronically today—that’s major progress from five years ago, when the number was an anemic 0.5 percent. He wants to see that number at 25 percent in two years.

Still, with door charges that start at $5 but can range as high as 3 percent of collected rent each month, the systems and related charges for accepting electronic payments can take a chunk out of a portfolio’s net operating income. That scenario causes many to ask why they should pay good money to make it easier for residents to pay what they already owe. The answer is that these systems can often lead to more efficient operations and save you money in the long run.

For example, Alliance Residential Management, a Houston-based operator of about 45,000 units, has implemented rent and utility billing and payment systems from Irvine, Calif.-based NWP Services Corp. A key component of that system is NWP’s Resident OneBill, a single statement that goes to residents detailing rent, utilities, and other fees. Residents can pay online or by dropping a check off at the leasing office.

One unexpected outcome? Residents began paying early. “If they get the bill on the 26th of the month, [they] pay it the same day,” says Brian Head, Alliance’s assistant vice president of business services. The earlier payments, in turn, boosted interest income, says COO Mark Copeland.

What’s more, Alliance was able to recoup more than $1 million in vacant utility charges, where residents would move into a unit but not switch the utilities to their names immediately. By monitoring the charges, Alliance can compare move-in dates to actual utility service periods and collect those charges from its residents.

Still, Alliance is only collecting 7 percent of its rents electronically, due in part to a lack of aggressive marketing efforts. Plus, some residents will never pay rent online. Despite this, the firm wants to make 20 percent to 30 percent of its rent collection electronic within 18 months.

Alliance’s experience belies another challenge when it comes to collecting rent electronically. Namely, the convenience of paying on-site. Some tenants write checks as a way to “float” their rent by a couple of days as payment clears their bank. And still others may relish the social aspects of catching up with the manager or exchanging the latest community gossip.

“Many still want to come in, hand you the money, and get a receipt,” says Diana Pittro, executive vice president at RMK Management Corp. in Chicago, which manages about 7,000 units in the Midwest. The firm uses San Francisco-based for electronic rent payments—23 percent of its residents pay rent electronically; the rest still choose traditional means.

Plastic Push

One catalyst for wider adoption of electronic rent payments may come from credit card companies, which are targeting the billions of dollars Americans pay in rent each month. “These companies are increasingly offering deals to get into the rent game,” says Allison Atsiknoudas, CEO of Belmont, Mass.-based Investment Instruments Corp., whose Rentomatic Web site offers billing, payment, and collection services. Where credit card firms charge up to a 4 percent fee to retailers, some marketing has been as low as 1.5 percent for rent payments as incentive for multifamily owners to get on board.

There are also incentives for renters in the form of rewards points. “Companies usually tell tenants they can save a stamp by paying online,” says Jeff Takle, co-founder of, a Stafford, Va.-based property management software company. “But telling them they can get two free airline tickets lights a fire under them.”

Tristan Jordan, spokesman for Purchase, N.Y.-based MasterCard Worldwide, says multifamily is high on the firm’s new markets list. “It’s an area where we think there is a compelling value proposition,” he says.

This article was first published in Multifamily Executive in April 2008.

E-Pay Essentials

These tips will help you implement a smart rent payment system.

1. Be pennywise, pound foolish. While rent payment systems do cost money, they also help save it. Processing paper checks also takes time and money, and accepting payment electronically cuts down on errors and multiple entries.

2. Enjoy the ancillary benefits. By setting up an electronic rent payment system, residents are more likely to pay rent on time, or early. Pocketing that time savings can translate into real money in terms of interest income.

3. Negotiate fees. Press credit card companies for volume and rate discounts. Use the fact that you accept credit card payments as an amenity for new renters.

Fast Facts:


No. of multifamily execs that said tech amenities would be desirable to their residents in 2009

Source: 2009 MFE Strategies Survey