Payments As A Service

Is Paying Rent With A Credit Card In Itself A Reward?

Can a rent payment be its own reward? The latest issue of the Payments as a Service Tracker™ features an interview with Philipp Postrehovsky, founder and COO of RentMoola, about the company’s full-service rent payment solution, which allows tenants to earn rewards just for paying the rent. You’ll also find the latest news stories from around the Payments as a Service space and a directory with 69 profiles of leading providers in the industry.

A few years ago, Philipp Postrehovsky’s brother, Patrick, was a Canadian expat living in Shanghai, and he had a problem.

His rent was due each month, in cash. But foreign ATM withdrawal limits forced him to visit the machines multiple times in order to get enough money to pay the rent.

After a few months of going through the inconvenience of this drill, Patrick got tired of it, along with the safety risk that came with all those ATM trips and carrying all that cash, and realized there had to be a better way. What if he could pay his rent with a credit card, he thought?

Meanwhile, back in Canada, Philipp was tired of writing paper checks each month for rent and believed he could benefit by earning rewards points by paying rent with his credit card.

When Patrick returned from Shanghai in 2013, the two decided to launch RentMoola, a more modern, full-service rent payments solution inspired by Patrick’s time in Shanghai that could help replace checks.

It was designed to allow renters in Canada and worldwide to pay their rent simply, using more convenient methods, like a debit or credit card, and earn points and rewards in the process. The company has since enrolled more than 50,000 renters, processed millions of dollars in rent payments and will soon be expanding to Ireland and the U.K.

PYMNTS recently caught up with Philipp Postrehovsky, the company’s cofounder and COO, to talk more about the solution and what he sees in the future for full-service rent payments.

 

Low-Tech Inspiration

After tiring of the ATM visits, Patrick’s initial solution to his rent situation in China was to purchase local currency using his card at a foreign exchange office.

“He figured out a way to take out money that was worth the fee that was added,” Philipp said of his brother. “It dropped points on his credit card and was a much more convenient way to pay.”

While his first rent payment workaround may have been low-tech, it proved to Patrick and his brother that it was worth it to use a credit card for rent, even if it did mean that he incurred a small fee from the exchange office. The convenience, along with the rewards he earned from using his credit card, made up for that expense.

He said that offering a similar full-service solution to consumers, complete with its own rewards program, could make up for the 2.75 percent the company charges.

The company partners with consumer favorites, such as Starbucks, Booking.com and Uber, to reward customers via its Moola Rewards program. Consumers earn rewards by paying rent through RentMoola and utilizing features such as auto payment services. They are also entered in RentMoola giveaways for prizes, such as free rent, prepaid gift cards and other incentives.

“Renters want to make rewarding payments any time, with any method, and we sought to do just that,” Postrehovsky said.

The brothers decided the solution would have a market in Canada and the U.S., where credit cards and mobile payments have become increasingly more popular than more outdated methods, such as checks, especially among younger consumers. So far, they’ve signed up 50,000 renters across the two countries.

According to a survey from the Federal Reserve, the number of checks in circulation declined by more than 50 percent from 2000 to 2012 as payments via cards and other new methods more than tripled. However, according to the same research from the Fed, checks still reign supreme when it comes to rent payments.

That disparity indicates that there’s an opportunity to capture young renters who don’t like using checks, Philipp said.

“That was one of the main pain points we were trying to solve,” he said.

 

Rewarding Tenants

Philipp and his team realized they also needed to make the service worthwhile for tenants.

The service does carry a fee on each transaction for payees, and while Philipp said the convenience alone is worth it for many consumers, RentMoola is built to rely on more than just convenience.

“So, from the tenant’s perspective, we’re not just offering payments,” he explained. “We have 200 brands that are partnered with us that offer specific deals, and that’s just trying to help build renter loyalty.”

Tim Williams, a senior manager of CAPREIT, a Toronto-based rental company that accepts payment via RentMoola, said it chose to partner with the company in large part due to its convenience and perks program.

“We had requests to allow credit cards as a payment option, and we added RentMoola to our payment list because we thought they best fit our residents’ needs,” Williams said. “RentMoola is used by several of our residents, and they find it an easy-to-use payment option and appreciate the MoolaPerks that are offered.”

Philipp noted that, if the service is used by payees who are certain they can pay their credit card bill each month and avoid debt, renters will not incur many credit card interest fees as a result of adopting the solution.

“We’re just aiming to provide a convenient payment solution that, if used responsibly, can be rewarding,” he said.

 

Expiration Date On Checks For Rent?

While the method of using checks has been around for a long time, checks can be expensive and time-consuming for property management companies to process, Postrehovsky said. In addition, checks have significant security flaws and continue to be the payment type most susceptible to fraudulent attacks, according to the Association for Financial Professionals’ 2015 Payments Fraud and Control Survey.

Philipp believes that modern solutions, like RentMoola, will spell the end for checks, noting that the Canadian government announced last year that it would eliminate their use by 2020.

“I think, in terms of paying online, I can definitely see it being credit cards via the mobile wallet,” he added. “We’re already seeing that in Canada even with the big banks adopting Apple Pay. I can just tap with my credit card anywhere I go.”

Postrehovsky noted that RentMoola has only had one instance of fraud thus far in its existence, despite processing millions of dollars in rent payments.

Renters can save time when they don’t have to use a check, Philipp said. “It also is a more convenient method for consumers, and it actually decreases the amount of people who don’t pay on time every year.”

For those who remain wedded to checks, Philipp and his team also offer benefits for property managers and landlords.

To provide a complete set of full-service solutions, the company integrates with other real estate solution providers, like Yardi and Rent, to offer accounting and data management and collection tools, among others.

“From the property manager perspective, again, we’re not just providing a payment solution,” Philipp said. The company also offers accounting software that can provide a seamless experience for property managers, including a dashboard with live stats and graphs with information about who has and hasn’t paid their rent.

 

International Demand

While the property management and rental industry has lagged behind when it comes to adopting modern, full-service payment solutions, Philipp said he thinks the industry will see a rise in the use of modern payment methods. Credit and debit card payment services, as well as mobile wallet solutions, like Apple Pay and Samsung Pay, will become commonly accepted payment methods in the next few years, he added.

In Philipp’s experience, his belief is informed by the demand he has seen for solutions like RentMoola, as well as the wider shift away from paper checks and toward credit cards in general. The company is currently working on two new initiatives in response to increased consumer demand.

RentMoola’s first initiative aims to add to its more than 15,000 users, mostly in Canada and young renters between the ages of 25 and 35, by increasing expansion efforts to the U.K. and Ireland. The company also plans to allow renters to use the service even if their property management company or landlord hasn’t partnered with RentMoola in order to try to capture a wider net of renters.

Philipp said that, as more young consumers who have grown up with credit and debit cards, as well as online and mobile payments, enter the rental market, that demand will continue to grow.

As full-service rent payment solutions that offer convenient payment methods and reward consumers for paying their rent become more widely available, the monthly rent check may soon be a thing of the past.

To download the September edition of the Payments as a Service Tracker™, click the button below.

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About The Tracker

The PYMNTS.com Payments as a Service Tracker™, in collaboration with Cayan, is designed to give an overview of the trends and activities of merchant platforms that not only enable payment processing of new and old technologies but also integrate with other features to improve the merchant’s experience, including customer engagement, security, omnichannel retail, analytics, inventory management, software and hardware management and more.

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