Chris Womack is Senior Vice President, Payments, Screening and Insurance, at AppFolio, Inc.
Real estate payment processing involves much more than monthly rent checks. For property managers, ensuring reliable and secure transactions requires a network of digital payment technology connecting vendors, residents and property owners. For residents, rent is often their largest monthly expense, while timely and convenient payments are key to maintaining relationships with trusted vendors. As a result, flexibility through tech adoption is more important than ever to meet expectations and provide a positive customer experience.
Meanwhile, escalating fraud risk and the sensitivity of residents’ and vendors’ personal information make security a priority for property managers. Sixty-five percent of organizations reported being the victims of payment fraud or attacks in 2022, and 44% were not able to recoup any of the funds following a successful fraud attempt.
Modern payment tools and offerings are an important part of meeting expectations around flexibility and navigating cybersecurity risks. As we start a new year, here’s a closer look at how payments technology has evolved to meet these needs and what managers stand to gain by using these tools in 2024.
Payments Security: A Growing Need In The Real Estate Space
Property managers are tasked with safeguarding sensitive and personally identifiable information for residents, owners and vendors. This also means they must adhere to various compliance requirements.
Shifting regulations and increased fraudulent attacks on e-commerce payments can keep property managers up at night. Fraud or compliance issues can cause a major headache for the business, not only impacting the bottom line but also the business’s reputation.
Working with a trusted payments processor, especially one that is directly integrated with the property management system of record, can help property managers mitigate security issues and maintain compliance. For example, many payment partners can enable features like two-factor authentication, bank verification and other security features, as well as allowing residents to input their bank details directly into the platform via a secure portal. These platforms also provide behind-the-scenes tools like transaction monitoring, flagging duplicate payments and protecting stored payment information.
A payments technology partner should provide everything property managers need to help reduce risk, protect residents’ sensitive information, create a more seamless payment process and be confident that the business is protected.
Flexibility And Personalization: Must-Haves For Rent Payments
As payment options have become more user-friendly and flexible across industries, many residents now expect their rent payment to be as seamless as paying for dinner or shopping online. Offering flexible rent mobile payment options like Apple Pay and security deposit alternatives can help property managers meet these expectations.
Flexible rent enables residents to divide their rent payments into smaller, more manageable amounts that can be paid throughout the month. This option gives property managers peace of mind that rents will be received on time while providing more financial flexibility to residents. Security deposit alternatives, on the other hand, eliminate the need for renters to provide cash security deposits while providing the same level of financial protection for property managers.
Data from my company shows a strong preference for these options among residents, particularly younger residents. According to our 2023 AppFolio Renter Preferences Report, 47% of renters say security deposit alternatives are important when evaluating a new unit, and 40% say flexible rent is important. Young renters in particular prefer these offerings, with more than half of millennial and Gen Z renters reporting that flexible rent is important.
However, only 13% of renters are able to use a security deposit alternative, and only 9% are able to use flexible rent. This suggests there is more demand for these services than there is availability, and that offering these amenities can help property managers stand out and attract new residents.
Addressing The Payment Needs Of Crucial Vendors
Vendor payments are also a key aspect of business operations for property managers. Security and efficiency are equally important for this process, especially as property managers look to maintain relationships with trusted vendors like plumbers, painters and electricians.
Many of the vendors that property managers rely on for crucial building maintenance are local small businesses that need to get paid as quickly as possible with as few hurdles as possible. New tech innovation enables digital payments to be made directly—and even instantly—between property managers and vendors, creating a simpler and more secure process for everyone involved.
A smooth and timely payment process can also help ensure these professionals are dispatched quickly to solve residents’ timely issues. An urgent plumbing or maintenance issue is not the time to be bogged down by traditional payment hurdles like waiting for a check to clear.
A payments platform ensures vendors get paid quickly and conveniently and also spares them from having to share sensitive banking information that could potentially expose their business to cybersecurity risks.
A Better Experience For Both Residents And Property Managers
Flexibility and security both come down to creating a positive and seamless experience for residents while yielding operational benefits for property managers. The same tools that offer flexibility and security for residents also increase efficiency for property management teams, leaving them with more time to focus on resident experience and growing their business.
Flexible payment amenities can help free up property managers from the burden of collecting late rent and managing friction-heavy payment processes like chasing down cash deposits. They also provide an added benefit via improved marketing of their properties to residents who prefer user-friendly payment options.
On the security and fraud protection side, robust cybersecurity tools enable property managers to keep up with the latest risks, comply with regulations and gain peace of mind knowing their residents’ sensitive information is well protected.
As we head into 2024, technology, and customer expectations, will continue to evolve, but the right payment partner will always innovate and ensure property managers are meeting their responsibility to provide secure, reliable and compliant payment processes.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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