Pay Rent Online: 5 Expert Tips for Accepting Digital Rent Payments
A proven set of best practices to get 100% of your residents to pay rent online.
There has been a shift. Multifamily management companies are now looking to implement an online rent payment system that not only offers a secure, seamless, and integrated solution but also a partner who will help them achieve a specific business objective – getting 100% of their residents to pay rent online.
Even before COVID-19 hit, we’ve been hyper-focused on empowering our clients to increase the number of residents who pay rent online. The industry average of digital rent payments was around 30%. The other 70% being paper checks, cash, and money orders.
But the top 25% of our customers had over 65% of their residents paying rent online. 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 these 5 key strategies:
- Train on-site staff to accept rent payments: “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. Top achievers also use lockbox services to convert checks into digital transactions.
- Resident Engagement and Communication: Ensure your community engagement technology is up to date.
Step 1: Train on-site staff to accept rent payments online
You can’t install new property technology, train your staff once, and never think about it again. A periodic review of best practices is necessary in order to keep up with new features and updates.
Provide an on-demand training arsenal for your team
Because of the pandemic, property staff have been stretched far beyond their job description. They’ve rapidly pivoted to self-guided tours, package management solutions, socially distanced or virtual community events, and have even had to handle IT or maintenance support. But luckily, with these added responsibilities came an abundance of available resources, i.e. Zoom, resident apps, package lockers, etc.
When it comes to training, you have to get inventive with new methods and media. Have you empowered your staff with the tools & support they need to be able to accept rent payments online? Do they have access to on-demand trainings, webinars, links to collateral, and updates on new info when it becomes available? Also, as our attention spans dwindle, are you choosing technology solutions that are easy to use?
BI & reporting tools for online rent payments
Use online rent payment BI Tools such as an insights dashboard and daily batch deposit report email notifications.
Online rent payment on-demand training
Provide continuous product training for your staff. That’s especially important if you experience high turnover. Use consistent educational refreshers to combat knowledge gaps and improve customer service.
Examples of Zego™ resources for property staff
- Video: 3 Tips to increase digital payment adoption
- Zego™ Onboarding: training webinars & recordings
- Infographic: 10 Ways to kickstart digital payments
- Interactive checklist: The digital payment adoption checklist to collect rent online
Use KPIs to drive more residents to pay rent online
Hold teams accountable with Key Performance Indicators (KPIs); measurable values that demonstrate the effectiveness of your team’s efforts.
Other KPIs you can track:
- Boost digital payment adoption from 20% to 80% by the end of the year
- Increase portfolio-wide adoption by X%
- Increase individual property adoption by X%
- Get X amount of AutoPay sign-ups
Run contests for site staff and residents
At Zego™, we find it best to run both resident and property contests. Sometimes we will help market and fund the contests for our clients, so that there is little to no work on the management company’s end.
Kingsley’s Contest Experience
Kingsley Management Corporation ran payment contests in the spring of 2020 to drive digital payments. There were two simultaneous contests running for three consecutive months across their entire portfolio (over 18,000 units). Any resident who paid rent via AutoPay during those three months was entered to win a $500 credit towards their next payment.
Their overall percentage of digital payments increased from 64% to 81% after successfully running two contests. Now, their on-site team can spend less time on the mundane administrative tasks associated with manual payment processing. That means there’s more time to engage with residents.
“We want to let our on-site staff focus on their park’s needs, and not spend their time collecting and inputting checks,” says Dakota Green, a member of the technical support team at Kingsley. “We have one park in California that went from 0% to 100% utilization in about 3 months. She told their residents they would no longer accept checks. It was a night and day difference. She has so much more time to focus on the park’s needs.”
FREE DOWNLOAD Download The Property Manager’s Guide to Common Rent Payment Mistakes to identify ways to improve your rent collection process & get paid faster.
Want a more efficient rent collection process?
Download The Property Manager’s Guide to Common Rent Payment Mistakes to identify ways to improve your rent collection process & get paid faster.
Step 2: On-boarding Residents to an Online Rent Payment System
How are your site staff communicating with new residents about how to pay rent online? Providing education and setting expectations at the start of the lease is the most critical step.
Provide residents with information about how to pay rent online
Our clients have found digital methods to be the most successful and cost-effective way to get more residents paying rent online. Emails, especially, are trackable. And, it allows residents to activate their account with one-click.
Almost 5 billion videos are watched on YouTube every day. For the residents who are less likely to read a pamphlet or an email, we encourage our clients to provide residents with an explainer video like the one below:
Set clear expectations around how and when residents should pay rent online
There are three areas to focus your marketing efforts on to encourage paying rent online at move-in; the application fee, the lease, and the move-in packet.
The application fee
The payment method residents start with is most likely the payment method they’ll end with. Take application fees online to get residents used to paying rent online prior to them even being a customer.
A simple, yet overlooked tactic is to inform residents about their payment options early on.
- Add a payments clause to your lease or rental agreement, and go over the details with each new resident.
- Let them know right off the bat that you do not accept cash for rent payments, but you do accept a digital solution for cash payments.
- List all of the acceptable forms of payment, but accentuate the fact that paying rent online is preferred.
The move-in packet
- In your new resident move-in packet, include a brochure with registration instructions for your payment portal, an AutoPay enrollment form, and promotional materials.
- Make sure they know how to download and log into your community app.
- Include instructions for paying rent online in your welcome letter
- Shutter your dropbox and hang signage directing residents to pay rent online instead.
Step 3. Alignment of Resident Incentives
How can you create a win-win rent collection strategy that benefits both you and your renters?
Choose the Right Pricing Model
Which pricing model is right for your portfolio? Check out our blog, Digital rent payment pricing models explained, for a deep dive into the three different types of pricing models and their benefits.
- Standard passed: When residents pay rent online, they also pay the processing fees.
- Standard incurred: The property management company pays the digital payment processing fees on behalf of their residents for one or more payment types (i.e. ACH).
- 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 rent online. It’s a subscription model that works best for management companies with over 50% adoption.
The graph below shows the percentage of residents who paid rent online depending on the pricing model (comparing the month of December 2019 to December 2020). The Subscription ACH plan is clearly the best choice for companies that are serious about increasing digital rent payment adoption.
Charge residents for paying with a paper check
As long as your residents have a free option to pay rent online, you have the power to charge a fee to those who still insist on paying via paper check. “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
Provide an incentive to those who pay rent online via AutoPay
AutoPays are a win-win. Your residents can “set it and forget it” and enjoy the convenience of having their rent paid online 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 rent online via AutoPay for three consecutive months, or do what Planned Property Management did and incur the first fee on the resident’s behalf.
“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
Close off your on-site drop boxes
The easiest way to eliminate paper checks altogether is to close off your on-site drop boxes. But you’ll need to offer a free method to pay rent online as an alternative. Both The Franklin Johnston Group and Coast Property Management employed this tactic and saw increased staff productivity and resident satisfaction as a result.
“We felt confident in the Zego™ system. So we gave residents five months notice that we were only going to accept digital rent payments,” said Melissa Pullin, Operations Manager for The Franklin Johnston Group. Their rent collection process has now dramatically improved. Read the full story on The Franklin Johnston Group.
At the beginning of 2020, Coast Property Management made a strategic decision to reduce the risks that come with paper payments and set a goal to move 80% of their resident payments to the Zego™ platform. “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 Maihofer, COO of Coast. At the start of 2020, digital 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.
Watch our interview with John about Coast Property Management’s digital payment adoption goals.
Educate residents on the benefits of rental credit reporting
Best-in-class payment providers will offer rental payment credit reporting, which will help set your community apart from your competitors.
But residents who pay rent online want their positive payments reported. Look at the numbers from this 2019 TransUnion survey.
- 73% of renters would be more likely to pay rent online and on-time if property managers reported rent payments to a credit bureau.
- 67% said they would choose the rental unit with reporting already in place when given a choice between two similar properties.
- 17% of multifamily rental property executives said they report payments to credit bureaus, giving you an advantage over the other 83% if you offer this incentive.
- Residents could increase their credit score by as much as 26 points in one year.
For Zego™ clients, Zego™ Pay LevelCredit Reporting is easy to turn on and reap the benefits from.
Step 4. Provide Multiple Ways to Pay Rent Online
Residents want flexibility. And flexibility from a payment modality perspective includes the ability to pay rent online by eCheck, credit card, debit card, and even virtual wallets (like PayPal). Going forward some of the leading payment platforms are working on accepting Apple Pay, Google Pay, etc. The more digital options you provide, the fewer cash, paper checks, and money orders you’ll receive.
Offer all major payment types so more residents can pay rent online
Give residents the ability to pay rent online via your community’s mobile app. In addition, you should accept all major payment types including:
- Debit card
- Credit card
- At least one tokenized payment service (PayPal, Apple Pay, etc).
Rapid bank account linking
Rapid account linking instantly authenticates bank accounts for payments, creating an easier way for residents to use their bank account to pay rent online. At Zego™, our Rapid Account Linking feature guides residents through a secure process to automatically link their bank account and ensure accuracy and ease.
Chargeback avoidance, protection, and recovery
Multifamily portfolios can lose tens of thousands of dollars annually due to chargebacks. Best-in-class payment providers will help property management companies avoid, protect, and recover from chargebacks.
At Zego™, our Zertified feature helps our clients with chargeback avoidance, protection, and recovery for all types of payments. From rent to application fees, ACH to credit card transactions, our solution gives our clients chargeback protection and peace of mind.
Convert paper checks to digital transactions
One of the innovations we’re starting to see emerge in the industry is mobile check scanning. At Zego™, our Mobile CheckScan feature allows renters to scan a check by taking a quick snapshot from their Zego™ Pay mobile app. From there, they can initiate an ACH payment from that bank account.
Manual check scanning
Check scanners convert checks and money orders into digital transactions, eliminating the time spent transporting checks to the bank, depositing them, and manually posting them to the resident ledgers. Check scanners have gained popularity (especially in senior-living communities), and have become a necessity for communities that still receive a large number of personal checks and certified funds. Here are some check scanning best practices.
Close the door on cash
Stop accepting cash and money orders altogether. Top payment providers offer an alternative cash payment method for unbanked residents.
Our CashPay solution, for example, lets residents pay with cash or debit card at over 25,000 retail locations nationwide. The CashPay transactions appear in the Zego™ system right away. They also integrate into your accounting software. Residents can even access their CashPay account number within the community app while they’re on the go.
City Gate needed a solution that offered a full suite of digital options, including credit cards, debit cards, ACH, and an alternative to cash payments. “We needed a resident cash option as part of our payment solution to support our older demographics,” said Jenny Rosario, Director of Implementation and Software. “We need the funds in the bank, period. With paper, there is so much room for errors, theft, and issues. We need to be as automated as possible and part of that is going online. We strongly encourage all of our residents at all of our properties to pay rent online. Our goal is 100% online payments.”
Step 5: Resident Engagement and Communication
The way residents connect with their community has evolved. Millennials and Gen Z (who now make up over 50% of renters nationwide) have been conditioned to lose patience for clunky, slow, or outdated software. Gen Z actually prefers high-speed internet and digital features over standard amenities like parking garages, gyms, or pools.
So how can you leverage the technology you have now and the technology of the future to improve resident satisfaction and create a sense of community?
Communicate on their terms
17% of turnover is due to residents being unhappy with their community manager. Don’t let poor resident engagement hinder your bottom line. Interact with residents via the following 5 channels:
- SMS/Text Messaging
- In-app messaging
- Phone call
Optimize your community app
Best-in-class resident experience apps provide additional functionality for things like maintenance requests, in-app communication with property staff, marketplace services, and more. Residents are more likely to pay rent online because they’re already engaging with the app.
Research conducted for Zego™ by Martec, a third-party firm, found that 46% of residents said they would use a mobile app to pay rent online if they had the option available to them.
Real estate investment firm, S2 Capital, saw a 27% increase in their residents paying rent online after implementing a community app. Lincoln Properties, one of the top 50 multifamily companies in the US, touts a 72% adoption of digital payments largely because of their mobile app.
Optimize your website
In addition to being quick-to-load and easy-to-navigate, your homepage should include a link to your payment portal above the fold. Online rent payments double when residents submit their application payments digitally. Are your application portal and payment portal easy to locate on your site?
“Collecting the application payments online 24/7, whether our office is open or not, really was a differentiator for us in the marketplace” – Diane Caton, Executive Vice President MSC
Schedule automatic reminders to pay rent online
Property managers can reduce late payments without lifting a finger by setting up automated rent reminders to residents in the form of monthly emails, texts, and even in-app push notifications.
After turning on automatic rent reminders for their residents, our clients saw average online rent payment adoption jump to over 60% portfolio-wide.
At Zego™, we provide a feature called Rent Cycle Automation. This helps you collect resident contact information and automate activation and rent reminder campaigns. One of the focal points is segmentation based on prior resident activity (smart reminders). Below are a few examples.
The beauty of these integrated resident emails? Renters receive a a tokenized link. That results in easy, one-click payments account registrations. Plus, it removes any friction during the payment process and moves the needle on digital payment adoption.
Need more ideas to get renters to pay online?
By now you know that digital rent payments drive efficiency and better cash flow. But there are certain pitfalls that prevent renters from paying online. Our ebook looks at the top mistakes that property managers make when collecting rent. Are you making any of them? Download The Property Manager’s Guide to Common Rent Payment Mistakes now.