As apartment owners begin offering online payment options, many are discovering that the technology poses some administrative challenges. Integrating e-payment systems with existing property management accounting software can be difficult.

Many landlords continue to use older desktop-based software programs that are far less flexible than newer Web-based platforms.

"There is a lot of room for improvement," said Bryant Shoemaker, vice president of marketing for Yardi Systems "Right now, there are several different systems for doing rent payment, and there’s not really a standard way of interfacing."

Poor data integration means that although e-payment providers can authorize credit cards and process payments, property managers must often still reconcile account ledgers and manually enter payments into the rent rolls within their property management software.

Integration gaps can also occur when payments are returned due to insufficient funds. Some e-payment providers cannot automatically post bad payments back to the tenant’s account with late charges added, said Dean Schmidt, senior vice president of product development for RealPage, which offers an e-payment module within its OneSite property management system.

E-payment providers are wasting no time in addressing these and other concerns. Programmers are designing new software that integrates seamlessly with the wide variety of property management systems commonly in use.

For example, RentPayment now features two-way data integration. Not only does the software post payments directly into the rent roll of a property manager’s database, explained Dan Urbina, an executive vice president at the company, but it exports data from the rent roll to "pre-populate" forms on the Internet portal where residents pay rent. When a resident logs onto a property-specific Web portal, Urbina explained, he or she is taken to a page actually located on one of RentPayment’s servers. During this process, RentPayment’s software automatically accesses a tenant’s account balance so that when the renter is ready to pay, all necessary information—name, apartment number, rent balance, etc.—is already entered.

Two-way integration is an added convenience for residents, and it also makes account reconciliation easier for property managers.

Transaction Fees

Another barrier to adoption arises when credit cards are used because this method of payment typically incurs higher transaction fees than ACH eChecks. Credit card transaction fees – generally around 2% to 3% – can represent serious money and can significantly eat into profit margins, especially on higher rent units like 3-bedroom apartments.

Fortunately, credit card company rules allow Internet merchants to pass transaction costs through to consumers in the form of convenience fees. However, some credit card companies like Visa have placed limitations on the amount of transaction fees that property owners can pass through to a resident who uses that credit card, which means the landlord has to absorb a portion of the transaction cost.

"Renters generally would prefer to pay with a credit card to earn rewards points, but the convenience fees are too high," says David Bateman, CEO of Property Solutions, a property management software company. According to Bateman, 80% of renters who use Property Solutions’ software choose the ACH eCheck option when given the choice of credit cards or eCheck. This is mainly because of the service fees of about $11 for a credit card payment versus $1 or $2 for eCheck.

Only about 15% of property managers who use Property Solutions software have decided to eliminate fees for residents and cover the costs entirely, says Bateman. He predicts that in the future more property managers will eliminate convenience fees to attract more renters and convert more of them to paying electronically. Bateman says that the best markets for credit card acceptance thus far have been university rental housing and luxury apartment buildings.

According to tenant surveys conducted by SatisFacts Research, renters strongly dislike paying convenience fees and are unlikely to use a credit card if they have to pay a high fee. Research shows adoption rates among residents who were very likely to use an electronic rent payment program dropped to 13% if a convenience fee was added to their monthly rent.

“When fees are not passed on to the renters by the property management company adoption rates increase significantly,” says Ryan Gilbert, CEO of Property Bridge, an electronic payments service provider. Over the last 12 months, Property Bridge processed over $500 million in transactions, up from $250 million last year.

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