Because 4 out of 10 rent payments are still made by check or money order, multifamily companies face the additional costs of processing single paper payments at $3 to $10 per transaction plus the increased risk of fraud.
If multifamily operators can increase digital payments by 10% for a 1,000-unit portfolio, it could save multifamily properties $7,000 annually, according to Zego, a Global Payments company. With Automated Clearing House (ACH) being the top choice for digital payment—along with debit and credit cards—Zego’s 2024 Rent Payment Report outlines five ways to encourage residents to pay rent online.
1. Give a Mix of Payment Options
Allowing residents the choice of payment type, whether that is ACH, credit or debit card, or paper conversion methods, can improve digital payment numbers. In 2023, Zego’s transaction data revealed ACH payments as the top choice for residents at 64.8%, followed by credit and debit card payments at 22.4% and paper conversion methods at 12.8%.
2. Incur ACH Fees on Behalf of Residents
Residents are more likely to pay rent online if ACH payments are free of service fees. In SatisFact’s Biennial Online Renter Study, 84.2% of renters marked “pay rent online without a service fee” as the most useful tech features. Respondents noted “pay rent online if there is a service fee” as the least useful at 18.7%. Zego notes that incurring ACH processing fees is approximately $1 per transaction compared with the costs of processing a paper payment with labor costs ranging from $3 to $10 per transaction.
3. Send Automated Reminders
Reminding residents to pay rent digitally before payment is due can increase the likelihood of them doing so, Zego found. Looking at utilization data among similarly sized multifamily portfolios, those that use rent reminders post 10% higher digital payment utilization.
4. Offer a Resident App Plus a Payment Portal
With a choice of where to pay, digital transactions are likely to increase, Zego says. Offering both a traditional resident portal and a community app where residents can pay can give the option of paying on a smart phone. Zego has seen as much as a 96% increase in digital payment utilization for clients who offer an app in additional to a payment portal.
5. Make Residents Aware of Payment Systems When Implemented
Creating and implementing an awareness plan to drive online payments when onboarding a new payments vendor can be crucial to utilization rates. Zego recommends making it easy for residents to register for online payments with QR codes, emails, and featuring the payment portal as a button on community websites prominently.
