Credit: Dave Plunkert

Over the past year, Dan Ross has seen the number of residents using credit cards for rent payment jump from 5 percent to 20 percent across his firm’s urban infill apartment properties in Indiana and Ohio. Ross, director of operations at Cleveland-based Landmark Management, thought the trend reflected the impact of the recession on apartment renters—until he realized that the uptick also coincided with Landmark’s move to an electronic payment system, which allows residents to pay for rent and ancillary expenses online with a credit card, automated clearing house (ACH) transaction, or direct bank account debit. “In the [tough] economy people have been slower to pay, so we are watching our rent rolls very carefully, and when we examined the increase we quickly concluded that what we were dealing with was a convenience factor,” Ross says.

Rental payment companies are receiving an increasing number of calls from property management firms and owners/operators seeking to maximize rental revenue through tighter collection efforts. ”Want to immediately improve rental collections? Offer flexibility,” says Jason Gardner, co-founder and vice president of Oakland, Calif.-based e-payment provider PropertyBridge, which allows rent payments via cash, credit and debit cards, ACH, and check scanning.

Indeed, e-payment systems accommodating a broad variety of payment types are a frontline ally for property managers struggling to secure on-time, paid-in-full rents from financially stressed residents. “We have properties that seem to be getting beat up more every month,” Ross says. “The goal right now is to keep us full and to maximize revenue streams, including rent.” In that regard, Ross says that moving to an e-payment system has actually improved rent collections at Landmark even in concessionary and delinquent environments.


While some multifamily firms are seeing a “convenience uptick” similar to Landmark’s in the use of credit cards for online rent payment, the vast majority of rental payments are still via old fashioned personal checks, and will likely remain that way for some time. Credit card use as a whole typically accounts for three percent of all rent payments, according to data collected by Irvine, Calif.-based-based NWP Services Corp., which offers a variety of electronic payment options via the company’s Resident ePay system.

Paper though they may be, handwritten checks still seamlessly fit into a multifamily e-payment platform. In addition to meeting resident payment preferences, the use of electronic check payments typically costs less than processing credit cards.In most cases, check scanning technologies can quickly digitize a physical check, rendering the paper check necessary only for unexpected legalities.

“Even if you don’t scan, make sure you photocopy your rent checks every month,” advises Dan Page, vice president of business development for Los Angeles-based rent collection agency “It’s good common sense. Like having three references and three emergency contacts and a valid social security number on all lease documents and actually verifying them every time.” Page also encourages multifamily operators to make use of check payment history services typically offered by check scanning companies. “While credit reports offer a broad view of a person’s overall credit worthiness, they don’t include information on bounced checks, which can indicate a pattern and practice of poor payment even if a person’s overall credit score is quite good.”

Credit card payment is more prevalent in higher-end communities. “We are definitely seeing a larger use of credit cards in the A-plus property segment over the past four or five months. That is being driven by the economy, but it’s also driven by convenience just as much and the benefits of being able to get miles and reward points,” says NWP president Mike Radice. “[But] compared to credit cards, we are seeing greater growth in convergent billing: Resident statements include rent charges, utility payments, and any other fees that are due. Property managers and owners are trying to maximize funds from operations because there’s no room for error these days.”

Radice says the use of convergent billing as part of an e-payment strategy has been successful in securing smaller ancillary balances, such as parking, from residents. Electronically linked up to pay their monthly gross balance, they are less likely to just drop a rent check at the office and force a property manager to chase them down for additional nickel and diming.

The Check’s In the Mail?

While the amount of national rental delinquencies resulting from the recession is difficult to quantify, collections agencies have seen their multifamily case file volume jump by approximately 20 percent. “The number of files that we are getting has increased dramatically,” Page says. “Additionally, the percentage that is being collected has gone down, and we are very good at what we do. People are really struggling, losing jobs, and having financial troubles.”

Moving to e-payment systems helps on both the front and back end of rent collection efforts. In addition to providing flexibility and “have it my way” customer service to the resident, check scanning, credit card, and ACH transactions are a great way to both secure immediate cash in the bank as well as offer debt collectors a hot lead on residents who mysteriously go delinquent.

Still, e-payments can post a threat to properties, particularly credit cards. In addition to higher processing fees levied by card issuers, Radice warns that credit cards can also be abused by renters looking for a free ride. Specifically, renters who might be facing financial difficulty will knowingly charge to an account that they cannot pay off. As soon as their balance is cleared by the property manager, they dispute the charge with their credit card company, and it’s up to the manager to legitimize the charge. “It’s a bit of a sleeper problem, but one that we have seen more of in the past 4 to 5 months,” Radice says.

There’s also been a recent uptick in money order theft and fraud from lockboxes. E-payment providers including NWP and PropertyBridge have responded by offering systems whereby residents can make cash or money order payments in secured locations. NWP is looking into setting up payments via Western Union, while PropertyBridge already allows for payment at 40,000 MoneyGram locations across the country.

No matter how high tech properties go, management must continue to diligently pursue on-site collections. Ross supports the tried-and-true strategy of proactive communication as a way of continuously cajoling residents for their monthly check. “We’re literally trying to talk to our residents on a weekly, if not daily, basis,” he says. Not only does such face time keep rent payments current and top of mind for property managers and residents alike, but it can also be a valuable tactic for securing rent money from a resident who might be letting things slide. “It’s a lot harder for someone to say no to their rent payment to your face than it is in an e-mail.” [M]

“We are definitely seeing a larger use of credit cards in the A-plus property segment over the past four or five months. That is being driven by the economy ... and the benefits of being able to get miles and reward points.” Mike Radice, president, NWP Services Corp., Irvine, Calif.

Click and Pay

E-payment systems can help improve quality of rent rolls under recessionary pressure.

  • EFFICIENCY: Even if most residents still prefer paying rent with a check, electronic check scanning software and services enable digitization for more efficient processing.

  • CONVENIENCE: While the use of credit cards for paying rent is not widespread, it still offers a convenience factor, especially for wired residents. Plus, adopting online payment services can often catalyze wider credit card usage.

  • PROMPT PAYMENT: Offering a broad array of e-payment options is a “pay my way” amenity for residents that also encourages prompt, regular rent payments. Regardless of your e-options, always continue to stress the importance of timely rent payment via face-to-face communication.