While the world of payments has mostly gone online – rent remains stubbornly analog in the age of digital. According to a recent Zillow study, 76 percent of rent payments are made offline – mostly in the form of checks, though cash and money orders make guest appearances from time to time.
And it was a situation that Ryan Abell, CEO & founder of PayRent.com found acutely annoying in his days as a property manager.
“So we dove in. I wanted to find out if I was the only one experiencing this type of pain.”
And after talking to his fellow property managers and landlords, what he found was a very fragmented series of methods: checks, cash, money orders, PayPal, Venmo but no “product” that was universally used – and consistently.
And so the idea for PayRent.com was born and launched in January of this year.
The Go-To Solution
The world of P2P opens a lot of possibility for bill payments, Abell told Karen Webster in a recent Matchmakers Is In chat, but despite the wide net it casts, it is not out-of-the-box tailored for rental payments.
“These types of apps don’t necessarily suit landlords’ modern needs, ”Abell said. “In many ways, we are climbing the same P2P payments mountain as a lot of other start-ups, but we are on a different trail because we are specifically addressing the needs of landlords.”
Particularly smaller landlords – as opposed to large-scale property management firms – that are managing a few properties, not thousands of units. Those types of operators don’t need a complex suite of property management tools, Abell noted, they just need a way to be paid fairly simply.
So PayRent allows landlords to create a profile on the PayRent.com site – and then gives them the ability to invite their tenants to pay that way. Consumers who accept that invitation then can choose to pay in a variety of ways, credit card, debit card or ACH payments.
“We are linked to over 1,000 financial institutions. Consumers can then link their bank account without ever leaving the app and immediately conduct a bank transfer. Once that happens, the landlord gets a receipt detailing the tenant name, the account address, the amount and the time it was made.”
Moreover, he noted, so that landlords do not have to face the unwanted reality of swipe fees – landlords do not pay the fees, the tenant does. The service is entirely free for landlords.
“This is very much a convenience for the consumer who does not have to write a check, put a postage stamp on it and send it in the mail. They would rather pay a $2.55 fee to get their rent paid on time. We have found that no one really pushes back on that,” Abell said.
He also found that consumers will prefer to use a credit card and even pay a 3 percent fee because a $30 charge for the card payment [on a $1,000 rent payment] is a lot better than paying a $100 late fee.”
And, he noted, so far tenants have shown a real enthusiasm for the service. Sixty five percent of the tenants that landlords invite to pay their rent that way, do.
“We’re still looking on the data on the favored payment methods and we are seeing about 60 percent ACH charges, and about 40 percent credit card payments. It is a bit higher on the credit card side than we expected, but it tells us that the 3 percent fee is not onerous.”
Getting To Scale
PayRent.com has a unique platform model in that it focuses on the landlord side who doesn’t pay, and uses those landlords to capture the other side of the platform – the tenants who do. Clearly an incentive for landlords to get connected and to try to get their tenants to get on board.
But bringing those landlords in is an effort in getting to scale in itself, Abell says – and which means they’ve been pursuing growth through strategic partnership.
“We operate nationwide, but we’ve launched about two months ago is an affiliate program. And through that program we partner with tenant background screening firms, associations that have a user base of landlords. And we provide a full co-branded application for these businesses, our affiliate, and our affiliate goes to their landlord and says we have payments, powered by PayRent.com, and here is the onboarding and here are the steps. That has been extremely successful for us so far.”
The note that beyond the access, it also gives them a cleaner conversion with landlords as well – because instead of having to target broadly through marketing for social media ad buy.
Moreover, he noted, PayRent has unique focus on what landlords need, as opposed to generic P2P payments acceptance.
“So let’s say there has been an eviction process – a tenant hasn’t paid rent and the landlord is trying to get them removed through a court. A tenant with access to PayPal, Venmo or a bank means that if they deposit a dollar into that landlord’s merchant account, the clock sets back to zero in some states like California.”
Abell said that there are about 2.7 million evictions in the United States alone – so it can be material to landlords. PayRent.com has implemented a setting that allows landlords to shut off receiving funds from a tenant once an eviction process has been started.
The PayRent app, he notes, also gives landlords access to a dashboard that alerts them when tenant’s rent payments are late.
“We also save tenants the awkwardness of calling a tenant to remind them their rent is due or late – our system sends out automatic reminders to tenants that the rent is due today. We also allow tenants to set up recurring payments so they can set it – and let it go.”
Abell said that most people don’t know that 50 percent of the rental market is comprised of smaller units and smaller owners. He believes he can close a gap by giving those landlords one platform that can enable any form of payment that a consumer wants to use to pay them – including PayPal, Venmo and anything else that might get consumer traction.