The Future of Digital Payments in Property Management
Transactions are fundamentally at the heart of any relationship between a property manager and a resident. With all of the changes in technology, it seems odd that we are still making and accepting rent payments the way our grandfathers did. Some alternative payment solutions have made small inroads, but overall industry penetration remains low. Real eChecks provide the solution for increased adoption of electronic payments in the property management industry.
Although there is no explicit transaction fee associated with accepting paper checks, if we look at transaction fees as the total cost a business incurs by accepting a method of payment, paper checks are extremely expensive. Lost revenue from disputes and bad checks (plus the associated administrative costs), as well as foregone treasury income, become the effective transaction fee levied on property managers.
ACH is one alternative to paper checks. However, ACH introduces a complex fee structure that encompasses non-sufficient funds (NSF) fees, setup fees, monthly minimums, and transaction fees, while failing to address the unstated transaction fees associated with paper checks. All ACH transactions carry a 60-day chargeback window and are not guaranteed, meaning property managers still have to deal with the headaches of disputed bills and bad check equivalents. ACH adoption among residents remains weak, as few residents are comfortable providing their bank information directly to billers.
Although ACH is frequently called an eCheck, this is something of a misnomer. Real eChecks offer a compelling payment solution for the property management industry. In 2004, the U.S. Congress enacted the Checking for the 21st Century Act (Check 21). The Check 21 Act is a federal law that permits the remote creation of digital checks and governs the process whereby they are generated. In contrast, ACH is managed by banks and is designed to protect the banks, not the payer and payee.
Digital checks are similar to paper checks in that they are still a legal contractual obligation between the payer and the payee (ACH transactions are not legal contractual obligations). While preserving this functionality, Check 21–compliant digital checks eliminate many of the previously mentioned inefficiencies and costs associated with paper checks.
As one might expect, digital checks substantially reduce administrative costs. However, the bulk of the savings can be found elsewhere. Zipmark, a secure 100% digital check payment platform, approves and guarantees eCheck payments in real-time, and removes the cost of bad checks. Further, Zipmark deposits funds into the biller’s operating account on the morning of the next business day. Overnight clearing increases property managers’ incremental treasury income by improving cash flow. Zipmark charges a transaction fee of 1% (capped at $5). Any cost benefit analysis will show that Zipmark is the solution for electronic rent payments.
Frequently Asked Questions
1. What is an eCheck?
An eCheck is an electronic version of a paper check, which can be used to make payments online or on a mobile phone. Zipmark is a secure digital check payment platform that guarantees funds and speeds up the settlement process, making funds available to billers on the morning of the next business day.
2. What is the difference between eChecks and ACH?
Remotely created digital checks did not exist until Congress passed the Checking for the 21st Century Act in 2003, writing it into U.S. law. Although ACH is sometimes called an eCheck, this is a misnomer. ACH is a bank-managed process, and as such, is designed to protect banks from risk. eChecks, on the other hand, are designed to protect both the payee and payer (the property manager and resident, in this case) giving them more control over the transaction on both ends.
3. How can I increase the adoption of digital rent payments?
If your residents already have checking accounts, registering for Zipmark is a breeze. With Zipmark, residents pay instantly and directly from their checking account. It’s a fast and secure way to move funds already in a bank account. Our seamless, natural product experience makes your residents’ lives easier, too — they’ll be happier, and you’ll see increased adoption of digital payments. We have already seen adoption of Zipmark grow 30%–40% month over month in property management trials (even where other electronic payment options were already available), indicating that many residents are willing and ready to embrace a secure, digital rent payment solution.
4. What are the cost advantages of digital checks?
As previously discussed, most rent payment options have total costs that far exceed the costs directly associated with the transaction. Zipmark charges 1% per transaction and has a maximum transaction fee of $5. In contrast, paper checks and wire transfers have average processing costs of about $7 and $10, respectively. Once administrative costs are factored in ACH has an average total processing cost of at over $4.50.
5. How much time does it take to get my money?
Zipmark deposits funds into your operating account on the next business day, providing improved cash flow and the opportunity for incremental income.
6. What about security?
As mentioned above, eChecking is a process governed by federal law. eChecks operate on an infrastructure created by the Federal Reserve Bank, creating the most secure payment environment possible for both parties.
7. Is this guaranteed?
Again, this depends on your eCheck provider. Zipmark guarantees funds, meaning that Zipmark transactions never bounce, and there are no chargebacks.
8. How do I learn more and get started?
Call your Advanced Reporting representative to setup a Webinar or email Zipmark directly for immediate response.