Brick-and-mortar retail is recovering, and workers are returning to physical offices, but the large-scale shifts in daily operations caused by the global health crisis are sticking around in some spaces.
Property management is one such industry. The traditionally check-dominant rent payment process no longer is financially feasible for landlords or tenants in a world in which payment speed and transparency are paramount, said Eachan Fletcher, CEO and co-founder of rental property management app NestEgg.
“For hundreds of years, rent payment has pretty much worked the same way, which is [the] landlord and tenant need to agree on a schedule that suits them [regarding] when rent is due and when it has to be paid by,” Fletcher said, noting that approximately 80% of United States rental payments were made via paper checks before the pandemic. “That’s typically, ‘Hey, I want full payment by the first of every month.’ Now, the reality is more and more these days, it’s very [difficult] to find an arrangement like that, that works for both parties.”
Finding a solution that can streamline rent payments from the perspective of the renter and the landlord is becoming a critical consideration as the property management space becomes more digital. This shift requires the support of technologies such as application program interfaces (APIs) that can categorize and finalize payments with the swiftness and visibility that is becoming key to both parties.
Using APIs to Cut Down on Rent Payment Friction
Property management payments have become more friction-laden as paper checks and other manual methods no longer can support the financial needs of landlords and tenants. This can strain landlord-tenant relationships, Fletcher explained, as neither side can find common ground.
Payment arrangements sometimes can frustrate tenants, especially when their pay schedules may make top-of-the-month payments inconvenient. Landlords who need to pay their mortgages, on the other hand, may experience cash pinches amid these late payments that could leave them without the necessary funds to address issues such as building maintenance or tenant concerns.
“Landlords don’t really have the flexibility tenants think they have, and tenants often have quite different financial circumstances to landlords,” he said. “So, neither side really understands the other, and neither side can really afford to meet the other’s terms.”
NestEgg aims to solve these frictions by using APIs to smoothly connect with banks and allow tenants to pay their rents digitally on a personalized schedule. This interaction, in turn, enables NestEgg to pay out landlords at the top of the month, easing cash-flow crunches. Both parties can use the app’s NestEgg Pay service to transfer funds or use credit or automated clearing house (ACH) payment rails.
Landlords also can leverage the app for building maintenance, send funds to vendors such as electricians or plumbers and keep track of invoices and other payments data. Streamlining payments can ease many of the typical frustrations that plague the landlord-tenant relationship, but this requires that both parties are able to send and share funds and payments data easily and transparently.
“I think what’s important to remember in any business, especially in the financial side, is [that] experiences are the first and last thing that matter,” Fletcher said. “Your customers always have to have a great experience, and you have to decide, what does that mean … in the context of payments. Things have to be accurate, they have to be instant, they have to be reliable. [There must be] complete visibility and transparency to where every dime is. Those are all the key things to a [quality payments] experience. The role that APIs can play is especially [important] when you’re talking about timeliness and visibility. You can get data [in] real time, and you can show someone, ‘Hey, at 11:07, you sent $400 to this person, and they received it at 11:16.’”
Having access to real-time data also is crucial when rolling out new features or products. Fletcher said NestEgg currently is developing API-driven lending capabilities that would rely on the technology to aggregate landlords’ data and payment information and offer them key insights on their properties. He noted that this would enable the property management company to suggest refinancing solutions or other options to help landlords save money, making them critical tools from an innovational and operational perspective.
APIs’ Role in the Future of Payments
APIs’ role in creating smooth, swift payment experiences across various use cases will continue to grow in the future. This is especially true as providing instant payments becomes less of a differentiator from the perspective of most digital consumers and businesses.
“If I were to [have to select to] pay you through Venmo or PayPal or Zelle, there’s really little to strongly differentiate those options,” Fletcher said. “It’s more down to, ‘Well, which one do you and I both have?’ So [there are] these little networks of payments, and I think those will become more interconnected … because at some point, you can [no longer] rely on walling in your customers.”
Analyzing the use of APIs to connect and streamline consumer-facing and B2B payments should be a top goal for companies in the property management space and beyond. Determining how to offer the instant and transparent payment experiences companies and individuals seek will be paramount as migration to a digital-first payments world continues.