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Rent Collection via ClearNow is More Cost Effective Than Credit Cards for Rental Property Owners
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Added: 01/10/2004
Type: Summary
Viewed: 646 time(s)
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Rent Collection via ClearNow is More Cost Effective Than Credit Cards for Rental Property Owners
AmericanBanker.com writer, Lavonne Kuykendall, writes that although Visa USA is trying to introduce credit cards to the apartment rental industry, property owners may want to think again before agreeing to accept them for rent payments. With Visa USA charging on a percentage basis, their merchant fees can be quite high (around 2.5% to 3% of rent amounts) thus making credit cards a less attractive means to collect rent. Compared to credit cards, ClearNow, Inc.’s automatic rent collection service is a cost-effective tool that saves landlords and property managers time and money. ClearNow automatically debits resident rents on a specific day each month and directly deposits these rents to the property’s checking account.
Because of the high merchant fees associated with credit cards, Visa USA’s strategy is to sell the concept to large properties that control thousands of apartments. However, according to the US Census, individuals own the majority of residential rental property - with the average ownership of rental property being one to five units. ClearNow enables all landlords and property managers to save time and money regardless of size. ClearNow eliminates trips to the bank, provides owners and managers faster access to funds, and relays prompt notification of residents who have paid.
Most importantly, ClearNow offers reasonable flat fee “pay-for-usage” pricing. “The ACH payment network is by far the most cost-effective and trusted way to electronically transfer rent from a resident’s checking account to his/her property’s checking account,” said Justin Yung, Vice President of ClearNow, Inc. “Compared to credit cards which bill on a percentage basis, ACH payments are significantly less expensive and are billed on a flat-fee basis.” ClearNow starts at just $14.95 for the first resident. Each subsequent resident is just an additional $1.80 per month. In comparison, a 3% credit card fee on a single $1,000 rent would be $30.00.
Robert Cain is publisher of Rental Property Reporter, a newsletter for apartment managers who own and manage less than 10 units. He does not believe credit cards will catch on in the small owner market. In addition to the high merchant fees, he believes landlords may face difficulty in qualifying for merchant status to accept credit cards.
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