From paper checks to ACH Transfers, there's an evolution happening in the U.S. real estate market, and change is coming fast for rent and mortgage payments.
Think about it, when was the last time you pulled out your checkbook? Or alternatively, collected payment by check? The truth is Americans are way more likely to carry an iPhone around in their pocket than a checkbook. That said, while 45% of people say they haven't written a check in the last year, 23% say they still write a check once a month.
Any guesses on what that check is for? If you said rent or mortgage payment, you would be right. The reality is property managers, banks, and landlords in America are still riddled with paper check processing. This article outlines the ins and outs of ACH bank transfers and how they make rent and real estate property payment processing a more streamlined experience.
Are paper checks dead? According to this article, maybe not, but that doesn't mean they shouldn't be.
Rent and mortgage payments are well known for taking the biggest chunk out of the average American's income; today's research suggests it could be as high as 50%.
This could explain why paper checks, on the decline at the rate of 7.2% per year since 2018, have seen their value rise to $27.23 trillion.
This means that although fewer people might be using them, the challenge for businesses in property management remains the same.
How do we process close to $30 trillion worth of paper checks mayhem when the average cost is nearly triple that of an ACH transaction?
ACH payments are a type of electronic funds transfer made through the Automated Clearing House (ACH) network, the dominant retail payment rail in the U.S. They are used for payouts and collections of all kinds and have experienced consistent growth since their inception.
Did you know that ACH transfers accounted for more than 90% of the rise in noncash payment value from 2018 to 2021? While most of this can be attributed to the government's stimulus payment program during the pandemic, the fact remains ACH transfers have increased simply because it is a much better payment solution.
For instance, 90 million Americans received an ACH credit that landed directly into their bank account with no action needed. The business case for ACH credit and ACH debit transactions is high. With little to no human effort, money moves seamlessly from sender to recipient and from recipient to sender.
On the other hand, let's consider that the Treasury mailed out approximately 150,000 paper stimulus checks worth roughly $442 million. In this case, the need for human intervention is high, both on the sender and receiver sides. Lots of actions need to be taken to get the money to get the funds from one account to the other.
There's a significant time cost to organizations for check issuance and check receiving. In contrast, ACH transactions are infinitely much easier to process, making the finance engine of the organization a more efficient component.
It is a payment solution becoming increasingly popular in real estate and property management. A faster and easier payment collection ensures less hassle for everyone involved, especially those dealing with multiple properties or tenants across different states.
ACH payment solutions are fast becoming a way for American businesses to reduce payment processing costs, improve operational efficiency and deliver payment methods adapted to a digital world.
Paper payments bring with them many challenges, including a major one, absolutely no control over the hows and when payments are made or the time frame in which they are processed. Along with the check comes a large amount of wasted time waiting. This wasted departmental time comes with a very high price tag for most organizations.
• Waiting on the tenant or property to mail the check.
• Waiting on the time it takes your finance department to process the check
• Waiting on the time it takes to clear the check.
In some situations, the time-lapse in these scenarios can be anywhere from 10 days to 2 months.
Gain back control by offering an ACH payment solution and get:
• The ability to track the entire payment cycle
• The visibility into what stage the transaction is in
• Advanced notification when the payment is processed
• The ability to automate scheduled payments
With faster processing times ACH transfers, funds are typically available within 1-2 business days, or in some cases instantly, allowing landlords and mortgage companies to receive payments quickly and efficiently.
Streamline the entire payment process and eliminate the need for manual check processing. By introducing automation to the payment process, businesses can reduce the administrative costs associated with processing paper checks to the tune of 40,000 USD per year.
When it comes to a safer and more secure payment method, ACH bank account payments win over paper checks any day. Paper checks can be lost, stolen, or forged, whereas ACH transfers are protected by multiple layers of security measures, including encryption, authentication, and tokenization. This ensures that payments are processed securely and that sensitive financial information is kept confidential.
Paper checks can't be automated. Paying and getting paid on time is more likely to happen when companies can put it on autopilot. Setting up recurring ACH payments for renters and mortgage borrowers eliminates the hassle of writing and mailing paper checks each month and a convenient way to guarantee payments are made on time, every time.
Use our dedicated payment portal and API integration and connect your business to North America's biggest bank account payment network.
Handle all your transactions to easily push or pull U.S. bank account payments at scale.
Automate collections by setting up recurring payments and simplify the entire payment process!