Paying the rent digitally — like most Americans now pay most of their bills — can be convenient to both landlords and tenants, but 70 percent of U.S. renters still pay by check, according to PayLease, an e-rent facilitator.
That statistic is motivation enough to sprout an e-payments industry sector which sees fast and widespread growth in coming years.
Online banking and bill paying, first on desktops and now on mobile devices as well, have grown dramatically in the new digital age. The use of paper checks fell 57 percent from 2000 to 2012, according to the most recent data from the Federal Reserve.
Across many income classes, the rental market is huge. There are 43 million rental households in the U.S., according to the Census Bureau. But renters have not budged much from using paper checks to pay their landlords, even if they pay their other bills online.
E-payment facilitators are fighting to capture a chunk of this market. For example, RadPad, a Los Angeles-based rental listing app startup, provides the option to renters of paying their rent from their smartphone, using a credit card, debit card, or, most recently, Apple Pay.
With Apple Pay, you can tap a single button in the app, press your finger to your phone’s Touch ID pad and your registered credit or debit card is charged. RadPad then takes the money, along with a 2.99 percent fee if you use a credit card, before writing and mailing a check to your landlord.
So far this year, RadPad has processed $60 million in rents through the “Pay with RadPad” feature in its Android and iOS app.
RadPad announced an additional $9 million in Series A funding this week, led by Altpoint Ventures. RadPad added the option to pay rent back in the fall of 2014. It’s free to renters if they use a debit card — although it used to cost $4.95 per month. The 2.99 percent credit card fee can be steep. For example, if you pay $2,000 in rent, it represents almost $60 more every month.
3rd-Party Players Enter Rent-Payment Space
Bloomberg recently reported on the firms in the e-payment sector that target landlords and tenants, and how they market their services. RentMoola, a Vancouver-based startup, offers deals from companies such as Uber and 1800Flowers to renters who pay online.
International Bancard operates an electronic rent-pay service. The company hosts pizza parties at tenants are personally instructed on the sign-up process.
The gist of Bloomberg’s report was that rent checks have not gone away, but they will eventually. ”
But it’s not certain what precise method will replace checks.
Smartphone payments service Venmo tells Bloomberg that it sees surges in usage around the first of the month. Landlords, meanwhile, will likely continue to add options for tenants to pay online via bank transfer.
And third-party entities, like as RadPad, accept debit- and credit-card payments from renters, then cut checks to landlords, Bloomberg points out.