Online rent payment: Overcoming the top 10 sources of confusion & hesitation among renters

Robin Young
Robin Young | 22 min. read

Published on November 15, 2021

You already know that online rent payment can save time and money for your business—and 68% of renters and 71% of rental owners say it’s important to them that their property manager allows them to make rent payments online.

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But even with widespread adoption of online rent payment among property managers, residents, and rental owners—particularly following the pandemic—the reality is that you may still have some renters who are hesitant to make the switch from the payment methods they’re used to.

To help us get to the bottom of the confusion and hesitation that some renters feel about digital transactions, we asked 2,287 renters what they like and dislike about paying their rent electronically. We found that many of the objections renters express are actually based on misconceptions about online payments that property managers can help to resolve.

We’ve used renters’ feedback to devise 10 suggestions for property managers to increase online rent payment adoption among their residents. In addition, we’ll share what renters and property managers appreciate about making rent payments online; as well as data from the 2022 Property Management Industry Report on the specific electronic payment methods that renters prefer.

The 10 Most Common Renter Objections to Online Rent Payment, and How Property Managers Can Overcome Them

#1. They conflate online payments with recurring payments and worry about their account being overdrawn.

What renters say: “I think [electronic payments] are automatic every month. I don’t like that. I want to control when my money is taken out of my account.”

What property managers can do: Make clear that recurring payments are completely optional, and renters can choose to make one-time payments every month if that’s their preference. While many renters find auto-payments helpful in ensuring that they never forget to pay their rent on time, others feel more comfortable sending a payment manually once they’ve verified that they have sufficient funds in their account.

#2. They worry that online payment systems could fail and they won’t know until they’re charged a late fee.

What renters say: “There’s a little risk in doing any financial transaction online. The physical check is a more reliable means of proving that the payment was made. Once, the website crashed right after I authorized the transaction, and I had a late fee as a result.”

What property managers can do: Remind renters that physical payment methods like cash, money orders, and checks carry their own risks (like loss or theft) that online rent payment methods avert. Make sure that residents know who to contact if they’re having technical difficulties when paying their rent—knowing that someone is there to help can ease some anxiety about making rent payments online. And lastly, consider reaching out before charging a late fee if you haven’t received a payment from a resident who tends to make online rent payments each month.

#3. They worry that digital transactions could be less secure.

What renters say: “Too many crooks [and] scammers out there. I like handing my landlord his rent payment to ensure he gets it.”

What property managers can do: Share information with your residents about how transactions are secured by the online rent payment system you use. For example, if you’re using platforms like Buildium, PayPal, or Venmo to process payments, you can refer residents to information that these companies have published on the steps they take to ensure users’ security, like encryption and two-factor authentication. Older renters in particular carry significant anxiety and inaccurate beliefs about how online transactions work; so it may also be helpful to recommend that they speak with a customer service representative at their bank to understand how their security is guaranteed during the process.

#4. They worry that online payments give you access to their bank accounts.

What renters say: “I don’t like [paying electronically] because they can take whatever they want out at any given time and they do not inform you of doing so, and it comes as a surprise on my bank statement. So I would rather be able to write out a check and send it to them.”

What property managers can do: Explain that establishing a link between two bank accounts only allows funds to be sent back and forth when an individual manually authorizes a payment to another party. It doesn’t mean that your team has the ability to access their account, or that they’ve ceded any type of control over their account to you. If they don’t want to be automatically charged for their rent payment each month, they can simply choose not to enable recurring payments. If they’re still confused, it might be helpful for them to speak directly with a representative from their bank.

#5. They worry that there won’t be any proof that they paid their rent.

What renters say: “I do not think that [paying electronically] is very secure and like to have the physical check or receipt as proof of payment and for my records.”

What property managers can do: Explain to residents that when they make a rent payment online, it creates a digital record of their transaction that is impossible to lose, unlike a paper receipt. For additional reassurance, consider using a system that automatically provides them with time-stamped proof of payment—like Buildium, which provides residents with a full history of their transactions—or sending a message confirming that you’ve received their payment.

#6. They don’t want to pay a convenience fee.

What renters say: “It’s very frustrating to pay a ‘convenience fee,’ as this seems like a punishment for using [this] form of payment. That should be covered under their business expenses and/or included in my rent, instead of on top each month.”

What property managers can do: Setting convenience fees at the right level requires balancing the revenue you generate with the disincentive they create. Renters will naturally see convenience fees as unpleasant or unfair, which sends mixed signals if you’re encouraging or requiring them to make payments online. It might require some experimentation to find a fee that’s low enough to not dissuade most renters from paying online, but that still provides you with an additional revenue stream. (Be sure to look into your state’s regulations regarding convenience fees as well.) Lastly, you might want to consider enabling credit card payments to allow renters to earn points by paying their rent each month, which can help renters to see how making payments online ultimately benefits them.

#7. They’re concerned about how long it will take their payment to be processed.

What renters say: “I don’t like that electronic transfers take several days to post, whereas using [a] card number posts immediately.”

What property managers can do: Walk residents through the different rent payment methods that are available to them and set expectations as to how long each one generally takes to process (for example, Buildium has a 1-day hold period for ePay transactions), as well as whether there are any additional costs associated with the transaction.

#8. They worry that it’ll be a hassle to figure out how to do it on their own.

What renters say: “[It’s] hard to figure it out, plus the follow-up calls to ensure it’s been sent properly. Plus, [there’s] no way for a hard-copy receipt.”

What property managers can do: Consider investing the time in creating resources to show residents how to complete payments online. For example, here are resources for property managers to help their residents start using Buildium’s Resident Center. You can provide these to new residents moving into your properties, as well as your less tech-savvy residents who need a little support before they’re ready to switch rent payment methods. And be sure to listen carefully to what, exactly, they anticipate being cumbersome about making rent payments online so that you can dispel their concerns—for example, by explaining how convenient it can be to pay from any location, at any time, with a user-friendly resident app like Buildium’s.

#9. They have no desire to change their current payment method.

What renters say:

  • Check: “I pay through my bank with a check, which I schedule at my own convenience and is sent by regular mail to my landlord. This system works well.”
  • Cash: “I’m a waitress, so to pay electronically, I would have to make a trip to the bank to deposit my tips, which is less convenient.”
  • Money order: “I prefer paying with [a] money order so I can pay rent when I have money, and I know exactly when [my] landlord gets it.”

What property managers can do: Give your residents options, even as you encourage them to adopt electronic rent payment methods. You may have residents for whom switching to a new rent payment method would simply cause more trouble than it’s worth—for example, an older resident with no access to technology, or a resident who gets paid in cash and can’t easily get to the bank. (By the way: retail cash payments can provide a convenient solution for renters in this situation.) But for renters who do have the means to switch rent payment methods, be sure to emphasize the convenience of being able to pay from anywhere, at any time. Many renters work non-standard business hours, live far away from their bank, or would simply prefer to not have to pay in person. A majority of respondents told us it’s been a game-changer for them to be able to pay from the comfort of their home at a time that’s convenient for them.

#10. They prefer to pay in person.

What renters say: “[With electronic payments], I can set up the payment ahead of time, setting the date of delivery precisely. But I enjoy interacting with my landlady, who lives on the property. So it isn’t a major need.”

What property managers can do: You might be surprised to hear us say this, but it can be beneficial to your business to continue allowing a minority of your residents to pay their rent in person if it’s what they and your staff prefer. We heard from a handful of property managers in this year’s Industry Survey that though automating rental processes frees up valuable time for their teams, they worry that there are fewer opportunities to infuse humanity into their customer service in a fully digitized world. If you feel that having face-time with a few of your renters each month can help you to build valuable relationships with them, we recommend offering in-person payments as an option for the small group that really appreciates them, even as you encourage the vast majority of your residents to pay their rent electronically.

10 Reasons Renters Prefer to Pay Their Rent Electronically

#1. They like the convenience and simplicity of completing rental processes online.

What renters say: “I really like paying rent electronically now that I have learned how to do it. My bank account information is saved on the rental property website, so all I have to do is log in [and] make a payment. It is done in a matter of minutes, and I have never had a problem with it. I have not found anything to dislike about this system. I trust that my information is safe.”

#2. They like being able to pay from the comfort of their home.

What renters say: “[It’s] a lot easier for me to go online and pay my rent instead of having to run a check across town and put [it] in the mailbox without being able to get a receipt.”

#3. They like that they can pay at a time that’s convenient for them.

What renters say: “I can do it on the go, and adjust payment times to suit when I get my paycheck.”

#4. Those that set up recurring payments like that it makes it impossible to forget to pay their rent on time.

What renters say: “[Paying electronically] makes my life much easier. I don’t have to remember the date and make sure that the check gets in on time. There’s nothing I have to do, it’s automatically taken out of my bank account.”

#5. They like that they have a digital record of their payment history.

What renters say: “[My] complete transaction history is digital. No more hassle of keeping track of receipts/paperwork.”

#6. They like that it’s quick and saves them time.

What renters say: “I like paying electronically because writing a check, finding an envelope, finding a stamp, addressing the envelope, finding a mailbox, hoping the landlord receives it on time, and then waiting for the check to clear the bank is cumbersome. Being able to have the whole process behind you in a few seconds on [your] computer or smartphone is much easier on the mind.”

#7. They see it as more secure than paying with physical methods like cash, money orders, or checks.

What renters say: “[I] can pay from home and have a record of payment, as opposed to filling out a check and dropping it in the manager’s mail slot, or possibly losing a money order before getting home and depositing it.”

#8. They appreciate payment methods that process the transaction instantaneously.

What renters say: “I like paying with Zelle because the money is available to my landlord in minutes, and it’s deducted from my account immediately, so I don’t have to wait for the payment to clear.”

#9. They appreciate that it saves paper.

What renters say: “I only get checks to pay rent. I wouldn’t have to order checks anymore. It seems that everywhere else takes credit and debit, why not property owners?”

#10. They appreciate that they can earn points or improve their credit score by paying rent on time.

What renters say: “[It] would be nice to reap credit card points on rent—we always pay rent on time.”

How Many Renters Want to Be Able to Pay Rent Online?

In our survey of renters for the 2022 Property Management Industry Report, we found that there’s a significant gap between the rent payment methods that residents want to use, and the methods that are currently available to them through their property manager or landlord.

All in all, we found that usage of electronic rent payment methods would be 23 percentage points higher if residents were able to pay the way they want to. Here’s what would happen if renters had the choice of any payment method they like:

  • Usage of debit cards would increase by an average of 8 percentage points
  • Usage of electronic payments (e.g. Venmo, PayPal, Zelle) would increase by 7 points
  • Usage of credit cards would increase by 5 points
  • Usage of EBT/ACH would increase by 4 points
  • Usage of checks would decrease by 13 points
  • Usage of cash would decrease by 6 points
  • Usage of money orders and cashier’s checks would decrease by 5 points

Surprisingly, this finding held across all age groups: Young, middle-aged, and older adults all overwhelmingly agreed that they would prefer to pay their rent by electronic bank transfer/ACH. Many young and middle-aged adults also strongly preferred to pay their rent with a debit card. Credit cards and payment tools like Venmo and PayPal were also moderately popular among all age groups, with credit card payments in particular presenting an opportunity for residents to earn points and build credit by paying their rent each month, and for property managers to generate revenue with convenience fees.

Why Property Managers Prefer Electronic Payments

As of 2021, 7 in 10 property managers offer electronic rent payments—a number that has steadily risen since the beginning of the pandemic. Property managers using Buildium to collect rent payments have found that they spend 70% less time processing payments, and some have seen delinquent payments decrease by as much as 60%.

Here’s what property managers have to say about why they prefer online payments for their own businesses, as well as for the convenience it offers to their residents and owner clients:

  • “Electronic payments and receipts have been invaluable given the Postal Service’s backlog during the pandemic. We also charge a convenience fee that helps us make a little off of each incoming payment.”
  • “Getting more tenants to pay by [credit] card helps our cash flow.”
  • “[Buildium’s] resident portal has cut down the amount of payments we have to take in via check. It is a smoother process for us.”
  • “The process of paying owners online is much faster than paying them by check.”
  • “We only switched completely to Buildium in January of 2020, and I am so thankful that we did. With electronic payments, automatic payments, electronic communication options, and [electronic] leases, we could not have been better prepared for the COVID-19 crisis. Our residents also seem comfortable with the new tools at their disposal.”

The 2022 Property Management Industry Report

During the pandemic, property managers have adopted a broad range of technologies to digitize interactions with their customers that they previously conducted face-to-face—and they’re keeping the tools that have increased their teams’ productivity and their customers’ satisfaction.

Download your free copy of the Industry Report to learn which technologies property managers plan to use to work smarter and faster in 2022, plus the tools that will help you to attract and retain residents and clients in the year to come.

Read more on Industry Intel
Robin Young

As Buildium’s Senior Researcher, Robin leverages her background in social science research and interest in real estate economics to identify trends in the rental market. She combines intensive market research with insights gleaned from surveys of property managers, renters, and rental owners to examine topics like shifting renter demographics, the housing affordability crisis, and the transformation of property management during the pandemic. She's best known as the author of the annual State of the Property Management Industry Report.

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