Last modified on April 5th, 2023
By Megan Eales Monroe
Whether it’s purchasing groceries with the tap of a phone, transferring funds through a digital wallet, or buying big-ticket items via installment payments, consumers have come to expect financial flexibility and convenience across their everyday lives.
Although today’s mobile payment and neobanking solutions have been in place for some time, the property management industry has been slow to adopt them. Instead, traditional payments — such as paper checks, bank transfers, and online credit card transactions — are still the norm. But because residents are consumers, their flexible payment expectations are high and property management companies are expected to meet them.
To gain a better understanding of why it’s in a property management company’s best interest to explore how to adopt new consumer payment trends and technology, we spoke with Adam Feinstein — VP of Product, Payments at AppFolio — on The Top Floor podcast.
Tune into the full episode now, or keep reading for highlights from our conversation.
1. Make it easier for residents by removing payment friction and barriers
Consumers want the least amount of friction possible when it comes to making any kind of payment, whether it’s for groceries, auto loans, or rent. They want to be able to pay as quickly, easily, and securely as possible, wherever they are, whenever they want.
New payment technology has made it easier than ever for consumers to do so, by allowing them to choose how they make payments. In turn, the ability to make payment methods more flexible and the processes easier has become an expectation rather than a novelty.
As Adam explained on The Top Floor podcast, this same trend can be used to look at how to best remove the friction and barriers to paying rent.
“Payment flexibility is about making it easy and worry-free for residents to be able to make a payment, which can be 30 to 50% of their overall income in any given month and a real heavy burden on them. So if we can make paying rent easier for them, that’ll improve their quality of life. Also, the more options and availability that they have, the more likely the property manager’s going to get paid on time and not have to deal with late payments or non-payment.”
2. Keep up with broader trends and gain a competitive edge
As already mentioned, businesses across every industry are making it easier than ever for customers to pay, thanks to new technology and online payments becoming the new norm. And it’s easy to see why with the win-win outcomes presented: consumers are able to choose how they pay, which means businesses can also get paid faster or more often.
By offering new, different, and more flexible ways for residents to pay, not only will property management companies be able to keep pace with broader consumer trends, it can also make properties more attractive to prospects. Because, as revealed in the 2022 U.S. Resident Motivations report, finding property management companies that provide financial flexibility is now more important to residents than ever before. And this is also a trend Adam believes will only continue to increase:
“I think this trend, which has been around for a while now, is kind of conditioned how we all think, how consumers think, residents are consumers, and we apply that mental model to everything in our lives. Right? And so, I do think there is an expectation that everything should have a flexible timeline for payment. I don’t think that’s going away. I think that’s going to increase over time. We’ve seen a really high majority of people want to pay online. We definitely still see communities and areas where money orders or electronic cash payment are something that are prevalent, but that is a vast declining space and the majority is digital.”
3. Increase resident satisfaction and retention
In addition to financial flexibility and payments becoming more important to residents, the 2022 U.S. Resident Motivations report also found that those who are offered financial flexibility have significantly higher levels of satisfaction with their property management company.
It’s also important to note that, while a bi-weekly payment schedule is still considered standard in the working world, the rise of independent, freelance, and gig economy work is rapidly shifting when a significant number of people get paid in the United States today. In fact, McKinsey’s American Opportunity Survey (AOS) recently found that “a remarkable 36 percent of employed respondents—equivalent to 58 million Americans when extrapolated from the representative sample—identify as independent workers.”
Because there is no longer a “true standard payment schedule” for workers, it also makes sense that having flexible payment options and financial flexibility from property managers can make residents happier, by simply meeting them where they are, in regards to how they get paid, and when, as Adam explains:
“Financial flexibility related to gig economy and transitions in terms of how people are earning their income is one key trend that I think then also connects with financial flexibility. I think we saw these early on with the rise of some of the new fintechs, the new neo-banks that are like, “Hey, you can get your payment a day earlier,” kind of some things with earned wage access. And so I think we’re seeing that trickle into rent, and it’s like how do we make it easy for people to pay rent? You get all these bills that are these recurring bills that may be due on the first. You’ve got your rent payment, you maybe have some car payment, insurance payment, and they kind of all get jammed up, and people have trouble budgeting and saving and planning ahead.”
Financial flexibility and payments are a win-win for everyone
Offering greater flexibility isn’t just a win for residents. It’s also a win for property management companies and property owners, too. More financial and payment flexibility means faster, easier ways to pay, which can help mitigate late and non-payment issues.
To learn more about how you can enhance your resident experience, download our free guide below.