Digital Transactions Authoritative, insightful and timely information for payments professionals
By Kevin Woodward
@DTPaymentNews
With more than 3 million renters enrolled in an online rent-payment service, Entrata Inc.’s desire to optimize its payment-card acceptance costs is paramount. That’s why Lehi, Utah-based Entrata is working with Visa Inc. on an improved payment and authorization program for the multifamily-housing industry.
Announced Thursday, the program lowers overall acceptance costs for Visa debit card holders while reducing the number of steps to authorize and process rent payments. “Entrata didn’t negotiate new rates,” Kate Hampton, Entrata vice president for ResidentPay, its tenant-payment service, tells Digital Transactions News in an email. “Entrata worked with Visa to help them align its rules and regulations to fit the specifics of our industry.” It eliminates phone authorizations for resident payments and several fee restrictions for credit and debit card payments, she says.
“MasterCard and Discover rules are both already fairly broad and now work very nicely with the modifications Visa has made,” Hampton says.
The typical Visa convenience fee is about $35 per transaction, Hampton says, “which we’ve seen is too high for many people to use a card rather than another option like check or cash.” The current average rent payment is $1,000.
Under the revised program, the debit card fees can be as low as $4.95 at participating properties, Entrata says. The program also enables tenants in some states to use their electronic benefits transfer cards to make online payments.
Entrata, which processed more than $18 billion in payments in the past 12 months, found that 4% of these transactions were made with cards. But a 10-month test under the revised program increased card adoption by more than six times for many of the multifamily properties.
The lower fees may entice more tenants to use a payment card, especially those, such as Millennials, who may not write as many checks as older consumers. Up to now, a leading card alternative has been automated clearing house transfers. “The only reason many of our renters are using the ACH option is because it has traditionally been the only affordable option,” says Lynn Bora, senior vice president of operations support for WinnResidential, a Boston-based property-management company. Overall ACH transactions, according to ACH-governing body NACHA, have grown at 5% per quarter for the past 18 months.
“In collaborating with Visa on this, we’re not only able to help renters save, but we’re also able to make the transaction process more streamlined and convenient all around,” Hampton says. “It saves the processing team time by encouraging a paperless system, and it gives renters more flexibility to pay how they’d like.”
