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Automatic Rent Collection through the ACH Payment Network


By Justin Yung


"If you want to win your residents' loyalty, save them time."


Property owners and managers who understand the benefits of high resident satisfaction - a reduction in resident turnover and invaluable 'word-of-mouth' promotion of their property - go to great lengths to provide excellent service to residents.


However, in their efforts to provide residents with an ever-increasing number of amenities and longer hours of service, many property owners and managers overlook a simple, inexpensive, and mutually beneficial amenity: the option for residents to pay their rent automatically.


Automatic payments require a one-time setup on the part of the resident. The resident provides the property manager with information from a credit card or a checking account. Once setup, the resident is relieved of the chore of remembering to pay rent and the hassle of writing and delivering a check.


While automatic payments have been used to achieve convenience for consumers in many areas - from health club dues and insurance payments to newspaper subscriptions - adoption in the rental housing market has been limited. One key reason for the slow adoption is that rents are high dollar amount transactions. If a property were to use credit cards in automatic rent collection, a percentage (approximately 2%) of the transaction amount would be charged to the property as a credit card fee. For a $700 rent, this would result in a $14 processing fee - a monthly charge that is financially unacceptable for many, if not most, property owners.


Fortunately, there is a better alternative. Property managers can set up automatic payments through the Automated Clearing House (ACH) payment network. The ACH network is the most widely used, bank-based electronic funds transfer network in the United States. It is the payment network that is used to transmit payroll for millions of employees through 'direct deposit.' The ACH network is safe, reliable, and inexpensive. Rather than charging a percentage of each transaction amount like credit cards, the ACH network charges a small fixed fee for each payment made.


Using the ACH payment network, property managers can schedule a resident's rent so that funds move automatically from a resident's checking account to the property company's checking account. Federal Regulation E (the Electronic Funds Transfer Act of 1978) safeguards consumers against the inappropriate movement of funds from their account.

Traditionally, setting up a property to use the ACH payment network meant purchasing ACH software for a PC and transferring files back and forth to an ACH processor (a bank or a company specializing in ACH processing). With the arrival of the Internet, there are Web-based solutions that make ACH payments easier to schedule than ever before.


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Justin Yung
ClearNow, Inc.
ClearNow, Inc. of Durham, North Carolina is a pioneer in easy-to-administer Web-based ACH solutions for the multifamily housing market. For more information, contact ClearNow, Inc. at 919-680-4500 or visit their Website at www.ClearNow.com.

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