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Electronic rent payment pricing models explained

How you structure your electronic rent payment pricing model is the biggest influencer of online payment adoption.

Given the choice, how would your residents prefer to pay rent? According to NMHC, 93% of today’s renters want to pay their rent online (via an app, credit card, debit card, etc). That means you have the opportunity to create an electronic rent payment strategy that saves your staff time, streamlines your AR, and boosts resident satisfaction.

The kicker is pricing. Electronic rent payment processing fees can be a tough pill for residents to swallow. Especially when there are peer-to-peer payment apps like Venmo that are free to use. Creating a positive resident experience has become a major focus in the industry. So it’s important to implement a digital rent payment structure that mutually benefits you, your staff, and your renters.


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Step 1. Choose the right electronic rent payment pricing model

The pricing model you set up with your provider has a direct effect on digital rent payment adoption. Leading management companies are finding a pricing model ‘sweet spot’ that incentivizes residents. But also reduces operating expenses and increases portfolio value. There are a few alternatives and considerations when it comes to pricing models. The chart below outlines three different types, their benefits, and their average digital rent payment adoption rates.

digital rent payment chart

Standard Passed

Residents pay the digital rent payment processing fees.


  • Traditionally, this has been an effective pricing model for the industry. Because it allows managers and owners to collect digital rent payments from their residents.
  • The ownership or management group does not incur a charge because those transaction fees are paid by the resident.


  • Management companies that use this type of pricing model typically have 20-30% digital rent payment adoption. Which is considerably lower than the other models.
  • Residents who would prefer to pay online, may drop off a check simply to avoid the convenience fee associated with the digital transaction.

Standard Incurred

The property management company pays the digital rent payment processing fees for one or more payment types (i.e. ACH) on behalf of their residents.


  • You’re providing your residents with a free and convenient digital rent payment option.
  • Not surprisingly, with this model, usage typically doubles.
  • Also, if you incur not only the ACH, but the credit card transaction fees as well, you can position this as a major resident perk. Because you’re basically giving them free points, airline miles, etc. every time they pay their rent with their rewards card. Not many management companies go this route, so it would provide a competitive advantage for your property. In a New York Post article about rent checks becoming obsolete, a resident reveals his desire to pay rent with plastic, “I wish my landlord allowed it as I would rather get those glorious credit card points.”


  • The cost to incur one or more of the transaction expenses for the digital rent payment method options.

Subscription ACH

The management company will pay a small, monthly per-unit fee that includes all ACH transaction costs no matter how many residents pay digitally. It’s a subscription model that works best for management companies with over 50% adoption.


  • Because ACH transaction fees are included in this model, you’re giving residents a free digital rent payment option.
  • This allows you to charge your own fee to process paper checks, cash, and money orders.
  • Management companies that go this route have substantially higher digital rent payment adoption rates in the 70-90% range.
  • They also dramatically reduce the time and operating expense of paper payments which frees up their staff to work more important initiatives.


  • A monthly per-unit subscription cost.

The break-even point:

Industry average pricing for a management company to incur ACH transaction fees is $1 per payment. The monthly cost for subscription ACH is typically around 50 cents per unit. So once over 50% of your resident payments are digital, it makes more sense to switch to the subscription model.

Here’s why: The table below assumes a 1,000 unit building, and illustrates the cost to incur per pricing model based on the percentage of digital rent payments they collect.

digital payment pricing model data

The proof is in the pudding

Take a look at the graph below that shows the percentage of digital rent payments depending on the pricing model (comparing the month of December 2019 to December 2020). Obviously the Subscription ACH plan is the best option for property management companies that are serious about increasing digital payment adoption.

digital payment pricing model bar graphic

Step 2. Charge residents for paying with a paper check

With a free electronic rent payment option available to your residents, you have the power to charge a fee to those who still insist on paying via check. As long as your tenants have one free payment option, the ball is in your court. You can choose what payment methods to allow or deny.

“Zego™  Pay is very easy and convenient for tenants. Especially now that our lobbies are closed. It is easy for our managers and accounting staff to allow or restrict payments also.” – Jeff Kunkle, Colorado Springs Housing Authority

In a New York Post article published in 2018, a local real estate broker commented that most landlords have been offering digital rent payment methods for the past few years. However, in 2018 there was a major uptick in landlords either requiring rent to be paid online, or least heavily discouraging other forms of payment.

Step 3. Provide an incentive for residents that sign-up for AutoPay

AutoPays are a win-win. Your residents can “set it and forget it” and enjoy the convenience of having their rent paid for them automatically. And you can count on digital, on-time payments each month.

But oftentimes residents don’t know where to go or how to get started. Since it’s mutually beneficial, why not offer a little incentive? Run an AutoPay contest, offer a small local gift card to residents who pay via AutoPay for three consecutive months, or do what Planned Property Management did and incur the first fee on the resident’s behalf.

Planned Property Management

With goals of achieving high digital rent payment adoption at their properties, Planned Property Management decided to incur the processing fee on their residents’ behalf for their first digital payment. After that, the resident would incur a modest convenience fee if they chose to continue to pay digitally.

“I would estimate at least 80% of our tenants have used Zego™  at least once. It is so much easier than writing a check and adoption has grown considerably within our tenant base.” – Mary Francis, Collections Manager, Planned Property Management

Offer electronic rent payment rewards program

The NAA interviewed Stephanie Puryear Helling of Greystar about their resident incentive program, “If a resident completes certain activities, such as renewing their lease or paying rent online, they can obtain point values toward various incentives. The program engages our residents and incentivizes them to participate in online, paperless activities.”

Offer flexible rent payments

Typically, rent is your residents’ largest monthly expense. With flexible rent payments, residents can pay rent on a schedule that works for their own budget and cash flow, while your properties get paid in-full and on-time at no cost to you. Now, renters can sign-up for flexible rent payments within the Zego app. Our partner, Flex, completes on-time payments on their behalf, while allowing them to split their rent into smaller, stress-free installments.

Step 4. Close off your on-site drop boxes

According to the NAA, property management companies who eliminate paper checks average a 50% decrease in delinquencies, along with many other benefits. And the easiest way to eliminate paper checks altogether is to close off your on-site drop boxes and offer a free digital rent payment option as an alternative.

Both The Franklin Johnston Group and Coast Property Management employed this tactic. And they both saw increased staff productivity and resident satisfaction as a result.

The Franklin Johnston Group

The Franklin Johnston Group, a developer and manager of multifamily residences in the conventional, senior, luxury, and affordable housing sectors, implemented Zego™ portfolio-wide. After months of smooth rent cycles, they decided to implement a paperless rent rule. “We felt confident in the Zego™  system. So we gave residents notice five months in advance that we were only going to accept digital rent payments.” said Melissa Pullin, Operations Manager.

Franklin Johnston’s rent collection process is now dramatically improved. Prospects submit application fees online and residents pay rent digitally. Pullin recognized a dramatic difference. “Before Zego™ , our community managers were manually entering resident payments into our system.” But now, “without the manual processes and the potential for human error, our on-site teams focus on important things like resident satisfaction.”

“I’d estimate every community has a week’s worth of work saved by going paperless. The majority of our residents supported the change because, in the end, it’s easier for them. Those who were hesitant came around after we showed them how to use the system and made them comfortable with the process.” said Stephanie Bertucci, Portfolio Manager.

Coast Property Management

Coast Property Management operates a 20,000 unit multifamily portfolio consisting of Market Rate and Affordable Housing. At the beginning of 2020, Coast made a strategic decision to reduce the risks that come with paper payments. They set a goal to move 80% of their resident payments to the Zego™  platform.

“Really we’re on a journey to move our client base to all electronic payments. Probably like many other companies we’re looking to make it efficient for our on site staff to focus on residents… and from the corporate side, reducing risk. If they’re not utilizing [Zego™ ], we’re still getting checks, and in some instances still getting cash, which from a risk mitigation standpoint isn’t good for us,” said John Maihofer, COO.

So how did Coast Property Management plan to reach their goal? “We’ve made a business decision that starting in 2020 all of our market rate properties, we’re only going to allow them to make a payment electronically through the [Zego™ ] platform,” said John.

At the start of 2020, digital rent payment adoption was at 25% across their portfolio. Now, as of October 2020, adoption has increased to 65.2%, moving them closer to their 80% target every month.

Step 5. Educate residents on the benefits of electronic rent payment reporting

Best-in-class payment providers will offer rental payment credit reporting, which will help set your community apart from your competitors.

  • Less than 1% of Americans see their positive rental payment history in their credit files
  • 17% of multifamily rental property executives said they report digital rent payments to credit bureaus

Allowing your residents to build their credit with their digital rent payments will not only reduce the amount of paper checks you receive, but also decrease late payments. It also attracts reliable renters, filling vacancies with quality tenants.

For Zego™  clients, Zego™ Pay LevelCredit Reporting is easy to turn on, and reap the benefits from.

Need more convincing? Let’s look at the numbers from a 2019 TransUnion survey.

digital rent payment infographic

Other electronic rent payment adoption strategies

Not offering a free way for renters to pay electronically stops you from having 100% digital rent payment adoption. That’s just one of the common mistakes property managers make about electronic rent payments. Want to learn the other mistakes that are making rent collection inefficient? Download our free guide, The Property Manager’s Guide to Common Rent Payment Mistakes & How to Fix Them.

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