payments
Confined primarily to cash and cheques, rental payments in the US
are a costly and time-consuming affair for landlords. Specialist
property payments company PropertyBridge is changing this by
offering cost- and time-saving multiple payment alternatives to a
market worth $200 billion annually. Charles Davis
reports.
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Every month, landlords across the US trudge to their offices, where
tenants descend on them. It’s rent week, and it plays out month
after month, often in archaic payment forms of cash and
cheques.
Payments company PropertyBridge hopes to narrow the gap by
providing landlords with a secure, internet-based payments
platform. Since its founding in 2002, PropertyBridge has grown
rapidly by offering multi-property (apartments and similar
residential complexes) landlords a convenient alternative to cash
and cheque payments from tenants. PropertyBridge’s system lets
tenants select multiple payment alternatives.
Now the company has received a huge shot in the arm: international
payments player MoneyGram International has bought the independent
sales organisation in a deal that will close in the fourth quarter
of this year.
Ryan Gilbert, PropertyBridge CEO, told EPI that the deal would give
PropertyBridge access to a global payments network with a highly
visible brand and thousands of MoneyGram remittance locations. “It
gives us a much larger base to grow from,” he said “It’s been a
highly vertical company, and we needed to broaden the base and
reach a greater number of properties.”
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By GlobalDataChasing the rent
Gilbert said that property rental management is a $200 billion
industry, yet the payments infrastructure is virtually untapped, as
most landlords still collect cash and cheques, and there is a heavy
reliance on money orders. The result is a drag on productivity, he
said, as landlords spend a week each month “completely focused on
occupancy and maintenance and a thousand other issues”. “A
landlord, in order to simplify operations, has created a five- to
seven-day window where all the emphasis is on getting payments in,
getting deposits made and chasing tenants,” Gilbert said.
PropertyBridge offers a complete rental payment solution including
the ability to electronically accept deposits and rent payments,
plus collect outstanding debt. Residents can pay rent online, by
phone or in person, and set up recurring payments. Through
Property-Bridge’s payments platform, consumers can pay rent and
other lease-related transactions using any of seven payment types
including credit and debit cards, automated clearing house (ACH)
and electronic cheques.
PropertyBridge’s rent payment solutions are integrated with the
accounting systems and business processes of property management
firms. The company collaborates with financial services leaders
including Visa, MasterCard, Discover Financial Services, American
Express, Wells Fargo and First National Bank of Omaha.
MoneyGram intends to keep PropertyBridge’s founding management team
and structure in place post-acquisition. Gilbert and president
Jason Gardner will continue at the helm, the PropertyBridge name
will be retained, and the company will remain headquartered in
California.
MoneyGram’s major products and services include global money
transfers, money orders and payment processing solutions for
financial institutions and retail customers. MoneyGram, which
recorded $1.2 billion in revenue in 2006, has about 125,000 global
money transfer agent locations in 170 countries and
territories.
The PropertyBridge service is a perfect fit for MoneyGram’s
customer base, which is mostly immigrants and the underbanked who
send money home or pay bills in-store and online. MoneyGram is the
largest provider of money orders in the US and the second-largest
money transmitter in the world, after Western Union.
A win-win proposition
According to research company Aite Group, just one-half of all
property managers offer an electronic payment option to renters,
compared to two-thirds of other widely used billers, such as
utilities and mobile phone carriers. Gilbert said offering
electronic payments to tenants is a win-win proposition, offering
benefits to landlords and renters alike.
Through PropertyBridge, all payments, including cheque scanning,
credit, debit cards and automatic bank withdrawal, are integrated
with existing property management processes and software. Landlords
are freed up to focus on more productive issues, and prospective
tenants get the attention they deserve. The month’s rent payments
are tucked away in the bank, and property managers enjoy immediate
access to funds.
Residents welcome the range of payment options and ancillary
benefits such as points if they use their credit cards to pay their
rent. They can also avoid late fees and choose recurring ACH
payments to have one less thing to worry about each month.
“The majority of renters are echo boomers [people in their early
20s] or baby boomers [ages 43 to 61], which means they are heavily
dependent upon the internet to arrange their lives,” he said. “They
use their credit and debit cards to pay for everything, and yet
their largest single payment is this old-fashioned cash or cheque
transaction.”
The cost of cheques
And those cheques are costly. The cost of processing paper cheques
manually may be partially hidden, but in fact is steep and
unnecessary for most multi-property managers. How costly this
approach can be when all factors including staff time and
travelling costs are considered is illustrated by an estimate made
by PropertyBridge. When using cheques for payment, costs of
collecting rentals of $625 per unit from a 250-unit complex total
$10.91 per month per unit.
MoneyGram’s acquisition of PropertyBridge gives it a much deeper
capital base, and an international footprint, although Gilbert said
that it’s too early to think about global expansion of the
model.
“Our focus is to lean on our business plan in the US, but we
certainly see the international markets as potentially a huge
opportunity, particularly the multi-property ownership market,” he
said. “The US is a more innovation-friendly payments market, and
you can move more quickly.”
Given time, though, Gilbert said, international markets would
succumb to the efficiencies of electronic rent payments.
“All over the world, rent week is essentially the same deal,” he
said. “Wherever there are large-value recurring payments we see
opportunity.”
