By Chris Seepe
Cheques (once called “bills of exchange”) go back to the First Persian Empire in 6th century BCE. The modern pre-printed namesake came into service with the Bank of England in 1717. Public availability of the Internet saw consumers and businesses move to online payments, generally called electronic payment processing (EPP) in the 1990s. The 2013 Canadian Internet Registration Authority Fact Book reports that nearly eight in 10 Canadians are online and Canadians spend more time online than any other country.
EPP requires less time, eliminates material costs and is more secure and private than cheques. So, why are so many landlords still using cheques instead of embracing EPP’s benefits?
Getting tenants (or landlords) to use something new can be a challenge. Technology must be designed for the near-lowest common denominator to be adopted and consistently used properly. The solution must be simple, easy to use and convenient.
Landlords are concerned about protecting personal information. Reporting, accounting, accountability and security are also key influencing factors. The 2013 Association for Financial Professionals Payments Fraud and Control Survey reported that 61 per cent of North American corporations experienced payment fraud, of which 87 per cent was attributed to paper cheques, and 28 per cent of companies suffered a financial loss.
Not all EPP solutions are the same.
I eliminated credit card and e-commerce offerings. They charge a percentage of each transaction. Even one per cent can be a notable annual expense. The credit card is a private financial instrument of the bank offering the service. Not every financial institution will accept every credit card. Credit card processors require three to five business days to process a transaction, and most require tenants to reveal personal and credit information.
Credit card services can claw back rent money if the tenant submits a case to have the money refunded. A debit card benefit is that the tenant can only pay with funds that are actually in their account. This eliminates NSF charges and the holding of funds, changing your A/R cycle from net 10-to-30 to net one-to-two. EPP also provides instant notification of payments. However, consumers using online debit must reveal their PIN to a third party, which can be compromised.
My list of features-benefits led me to my final choice because of its low per-transaction fee, no training costs and no hidden, setup or monthly fees.
TenantPay is a payment portal that collects your money from various sources, aggregates it (saving individual deposit fees) and delivers it to your bank account within 30 hours. It is a true banking instrument, accepted by every financial institution across Canada.
I absorbed the cost of TenantPay to encourage tenants to use it, and because my per-transaction cost was so low and the tenants do my deposits. I wrote a letter to each tenant extolling the virtues of the system. They could pay their rent exactly as they would their utility bill. Best of all, TenantPay doesn’t need any personal information. I gave each tenant a single, non-descriptive number – nothing else. I assigned it to the apartment unit, not the tenant. If a tenant moves out, I give the same number to the next tenant who moves in. Tracking how much the rental unit makes is my key financial concern.
You can collect any kind of payment with TenantPay. Multiple tenants residing in the same suite can use the same number. Parents can make payments from any province and setup recurring monthly payments for their children attending school.
TenantPay is written into my rental agreement. Tenants have no obligation to pay electronically or even provide postdated cheques, and they’re protected by law from paying a convenience fee. However, an explanation of its many benefits, especially its convenience, no fee and privacy, made it easy to convert all my tenants.
It takes only seconds for a tenant to add it to their bill-paying list. Because their rent is a fixed amount annually, they too can schedule automatic payments; no more excuses about forgetting to pay the rent. A tenant can’t transfer funds they don’t have so you’ll never get another NSF notice or the associated costs. It’s super-convenient for a tenant to pay in parts too if he doesn’t have all the money at once.
There are myriad reasons for replacing cheques with EPP. You’ll eliminate the cost of materials and postage, reduce the risk of privacy exposure, boost your organization’s productivity and provide the simplest, most private, convenient, flexible and secure payment solution available for your tenants.
Chris Seepe is a commercial real estate broker and broker of record at Aztech Realty in Toronto, specializing in income-generating and multi-residential investment properties, retail plazas, science and technology related specialty uses, and tenants’ mandates. (416) 525-1558 cseepe@aztechrealty.com; www.aztechrealty.com
Chris Seepe spent 35+ years in I.T. before entering commercial real estate a decade ago. He’s a published writer and author of two books on “landlording,” course instructor, president of the Landlords Association of Durham, and a commercial real estate broker of record at Aztech Realty in Toronto, specializing in income-generating and multi-residential investment properties. Call (416) 525-1558, or send him an email.
