Why Digital Rent Payments are Here to Stay Post-COVID
The undeniable and lasting shift towards digital rent payments due to circumstances brought on by the pandemic.
A renewed demand for digital payment solutions
2020 united communities through a common enemy: COVID-19. Property managers across the nation had to adjust operations, oftentimes scrambling to keep residents happy and properties safe and sanitized. Not surprisingly, the centralization of the rent collection process became an immediate focus. Multifamily owners and operators wondered what initiatives they could put in place to increase overall collections in a sustainable manner. And automation was the answer. The industry’s gradual shift over the last decade towards collecting rent online got a colossal boost thanks to the pandemic.
Virtual conferences and webinars featured story after story of multifamily management firms playing technology catch-up. Our industry is known for being slow to adopt. But now, we seem to be moving at warp speed. And it’s about time! More residents are expecting contactless rent payment options than ever before.
So as we hopefully move into the future with resiliency and optimism (and with a new or refreshed stack of digital solutions), let’s take a moment to examine how we got here. How did COVID-19 play a role in the shift towards collecting rent online? And why is this process here to stay?
Online rent payments spiked in 2020 and allowed for more timely payments
According to a 2020 report by the NLA (National Landlord Association), of all landlords and property managers surveyed, the percentage of digital payments almost doubled from 17% in Q4 of 2019 to 33% in Q4 of 2020. Data from our Zego™ Pay digital payment platform found that credit card usage was up 43% for the first half of 2020. And there were almost 34,000 new online payment portal user registrations in April alone. Which is a 138% month-over-month increase from March. This high registration trend at the beginning of the pandemic could indicate that management companies were moving quickly to get their residents on-board. This spike could also indicate that communities were more actively marketing their digital rent payment options to their residents.
Collecting rent online increases the number of timely rent payments
The data from the NLA report shows that outstanding rent has more than doubled since 2019, from 1.9% to 4.5%. However, outstanding rent for online payments was 20 times less than the average across all transaction methods. Also, digital rent payments represent a far greater share of timely payments (92%) than an average rent payment (55%). These numbers show us that the pandemic has driven the acceleration of digital payment platforms. Which has allowed communities to collect more timely payments by offering a contactless method.
How COVID-19 made digital rent payments a priority
Looking at the data, it’s apparent that collecting rent online has significantly increased over the past year. This is a trend that should continue upward. Multifamily owners and operators should be motivated to implement strategic programs to boost online payment adoption in their communities. Why? During 2020, these four major shifts reshaped rent collection for the foreseeable future.
1. Residents want germ-free payments
In a socially distanced world, contactless payments are no longer a nice-to-have, they are a must!
2. A decade of historic rent growth has come to an end
Maintaining a positive cash flow and reducing operating expenses has never been more crucial. But in a time when raising the rent is no longer an option, multifamily businesses must now look for alternate strategies.
3. Resident demographics are shifting
Two-thirds of residents are now Millennials or Gen Z. These younger renters grew up with smartphones in their hands. They have never known a world without the internet. In fact, 62% of Gen Z renters consider apartment technology to be very important when looking for a place to rent, more than any previous generation.
4. The world is increasingly data-driven
We’re obsessed with it. From health apps that track our heart rate to smartphones that track our screen time, almost everything we do is data-driven. Pulling and analyzing data is a lot harder to do when you’re manually processing paper checks. Digital payments are automatically recorded and time stamped in your online database, allowing you and your team easy access to various, customized reporting.
How to speed up the adoption of online rent payments
Simply offering an online payment portal isn’t enough. The fact that 67% of rent is still being paid with a check, cash, or money order (according to that NLA report), shows that property leaders need to consider all of the different methods and strategies available for collecting rent online.
Even before the pandemic, we noticed that the average percentage of digital payments across the multifamily industry was around 30%. But we also noticed that the top quartile of our customers had digital payment adoption rates north of 65%. So we launched a research study to find out what those companies were doing differently. During the study, we found that they were proactively driving digital payments through a number of innovative strategies. So we collected our findings and created a guide to 100% digital payment adoption. A 5-step process jam-packed with checklists and action items property management teams could implement immediately.
Now that COVID-19 has drastically altered the multifamily landscape, we rolled up our sleeves and dove back in. We found more anecdotes, strategies, and data to enhance the guide. Which now presents our 100% digital payments best practice through a post-COVID lens. This comprehensive program includes instructions, checklists, sample assets, and additional tools to help you collect more digital rent payments. Management companies who have implemented the strategies outlined in this guide have seen digital payment adoption rates skyrocket.
The 5 methods for 100% digital rent payment adoption
Collecting rent online and getting rid of paper checks, cash, and money orders once and for all has been a key focus for many of our clients. Are you and your team actively focused on this initiative? If so, we’ve identified the five key levers you can pull to drastically improve digital payment adoption rates.
- On-site staff change management & training: “On-demand” training for your on-site associates around the value and the functionality of your digital payments system.
- Resident Onboarding: Information you should provide new residents upfront, and set clear expectations around when and how payments should be made.
- Resident Incentives: A win-win payment structure that benefits both you and your renters.
- Multiple Payment Options: All the different payment types you should be offering, including a cash payment alternative.
- Resident Engagement and Communication: Ensure your community engagement technology is up to date.
For a limited time, we’re offering free access to the guide. Download your copy of 5 Proven steps to reach 100% digital payment adoption today. Start your journey towards collecting 100% of rent payments online.