Our previous article dug into the nitty gritty of Proptech; we shared insights on the trends propelling the industry forward and spoke to the payment inefficiencies property managers face. In this post, we expand on proptech payment software and its impact on the rental market.
Payment software solutions are weaving their way into every business, big or small, and proptech is no exception.
Property Management Payments
In 2016, Harvard Business School reported on how renters were paying:
22% paid in cash
16% money order
At the time, only 8% used bank account number payments, 7% for online banking bill payments, and less than 2% used debit and credit cards. The question is, have these numbers changed much in the last six years? The answer, unfortunately not. Chasing tenants to collect rent and managing paper cheques is still very common in the rental industry. And this payment collection process is wreaking havoc when it comes to the property management industry.
Change, however, is on the horizon. Proptech is revolutionizing the industry, landlords and tenants are embracing technology, and the challenges around rent collection are becoming obsolete.
Snapshot: The Rental Market
From a broader point of view, it is important to consider an increasing world population and skyrocketing inflation that adds to the burgeoning rental market. Retaining tenants is a must in today’s competitive rental market. Property managers and landlords need to deliver that first-class service.
The rental market in Canada grew 3.8% in 2022 and today is worth $48.4 billion. And when we look at it worldwide, we expect the real estate rental market to reach $3476 billion globally by 2026.
Imagine how many people you would need and how long it would take to process almost $50 billion worth of cheques. Now multiply that by 70. The numbers are staggering.
When it comes to traditional payment processing, the roadblocks businesses deal with and have to manage daily affect their cash flow and significantly impact business performance.
What does all this mean? It means there are opportunities.
How Payments Fix the Problem
Problem: Insufficient funds in the account
NSF or failed payments are most notably a common and recurring problem for landlords. Is it a rubber cheque? Was the account closed? Was it a credit card expiry? Maybe it is as simple as the funds were there yesterday but not today (too many payments coming out all at once). Either way, this is a big problem for businesses to overcome.
A payment solution that can verify users’ identities, authenticate the bank account before the transaction, and has visibility into the account to verify funds. With these guardrails in place, property managers can ensure they get paid on time every time. And that is something you can take to the bank!
Problem: Where’s the data?
No information accompanying the transaction makes things complicated for everyone involved. The workload involved in backwards tracking and matching payment to renter or building is significant. And unnecessary in our digitized world.
Complete transaction visibility. Pulling up a dashboard to determine where a payment came from or where one is going makes everyone’s life much easier. When property managers have a complete picture of who’s on the other end of a payment, data accuracy is assured, time is saved, and reporting is clear, concise, and in real-time.
Problem: Manual file processing and complex accounting reconciliations
Someone has to do the work. More often than not, it is Bob in accounting ( hey, Bob). Bob is intelligent but spends a lot of his time doing repetitive manual tasks. It is not just us saying this because the Hackett Group also said that accountants and financial personnel spend 65% of their time on manual, low-value processes.
Working with a payment partner, such as VoPay, means shifting the workload encompassing all the behind-the-scenes of payment transactions, including onboarding and compliance with the payment solution provider. This allows Bob to focus on the things that really matter, providing him with the right tools for strategic decision-making.
When property managers move from manually handling all paperwork to one platform, it’s hard not to overstate the amount of time they will save. Think in the thousands, not the hundreds.
Moreover, simple things like moving to automated payments and managing requests in one place will allow property managers to allocate their time and resources more efficiently. They can: Pick up on projects that have been on the back burner, help tenants with simple requests or even complete more creative tasks that there is never time for.
Deliver a Better Tenant Rental Experience
What can Tenants Expect?
☑️ An easier onboarding process
☑️ Electronic leases and renewals with multiple payment options
☑️ Automated, digital payments using their online banking system
Many tenants rent because it’s easier. So, why not make all processes more manageable, including electronic onboarding, digital leases, and renewals? This is what tenants want, and this is what tenants deserve. Plus, by giving tenants an enjoyable experience, they are more likely to share with friends and family (potential future clients). Possibly even a few 5-star Google reviews.
Integrating Payment Software in Proptech
Recently, VoPay partnered with Canadian property management software provider Plexflow. Plexflow gives property managers and landlords a one-stop shop by utilizing their property management platform. From the Plexflow platform, they can collect rent, manage expenses, and gain better visibility on cash flows, among many other features. By integrating VoPay’s payment software into their platform, property managers can:
• Verify available funds
• Facilitate instant rent collection
• Streamline the onboarding process for tenants
Embedded payment solutions ensure less time is spent chasing payments and reconciling deposits—and more time property managers can spend keeping tenants happy. And in the end, landlords’ return on investment rises.
And by marrying payment technology and Proptech, all payments are managed from a single portal, which improves cash flow management, and reconciliation becomes a much more fluid process.
Solve Your Payment Challenges
One stack instead of many. VoPay’s unified technology stack eliminates the need to build the infrastructure and integrate multiple disparate financial systems. Our Fintech-as-a-Service platform embeds financial services and real-time payment capabilities into any existing software application, product or service through a single scalable API. We are enabling PropTech providers across Canada to expand their payment technology through innovation and speed.
We look forward to watching this industry transform over the next few years and we are excited to be a part of it
Learn more about the technology that will improve your service, streamline your processes, and grow your business. Contact us today!