Among payment methods that real estate firms expect real-time payments to replace, paper checks top the list. Standard ACH, debit cards and cash could be on the chopping block too. This shows that the real estate payment ecosystem may be on the cusp of major changes.
As the July rollout of the FedNow real-time payments system comes into view, we studied the forthcoming shakeup in “Corporate Changes in B2B Payment Practices: The Future of Real-Time Payments in Real Estate,” a PYMNTS and The Clearing House collaboration.
Like all major changes, this one has its challenges as the study notes, “Real estate firms realize that adopting modern payment solutions can help — 90% of those we surveyed plan to start using real-time payments to receive payments within the next year. However, most real estate firms noted obstacles to their adoption, such as the difficulty of replacing legacy IT infrastructure and high perceived costs of adopting real-time payments.”
For example, 84% of real estate firms think real-time payments will replace checks for making payments, while 77% say the same for receiving payments. Additionally, 65% of respondents think real-time payments “are positioned to replace both standard automated clearing house (ACH) and debit cards as a method of making payments. To a lesser extent, they also view real-time payments as replacing credit cards, at 23%, and cash, at 29%, for making payments.”
Paper checks that remain common in the real estate sector will be the first to go. Per the study, “real-time payments are poised to send the old-fashioned paper check into retirement for good. Our data shows that most real estate firms believe checks could be replaced by real-time payments for both making and receiving payments, at 84% and 77%, respectively — and this is just the beginning.”
Also, 65% of real estate executives surveyed said real-time payments may replace both standard ACH and debit cards as the go-to method for making payments. Compare that to the 29% of firms feeling the same about cash and the 23% who feel credit cards could be displaced.
“For receiving payments, 73% of firms believe real-time payments could replace debit cards, and 55% and 32% said the same about cash and credit cards, respectively. Indeed, of all payment methods included in our study, respondents expect same-day ACH to be least likely to be replaced by real-time payments, with just 7% and 5% of firms indicating this outcome for making and receiving payments, respectively,” the study states.