Paper checks are hurting your bottom line; however, they remain the preferred payment method among residents. Why is it that residents prefer to pay dues and fees using this declining, outdated method of payment? Today we’re going to analyze current payment trends and make the case for property management companies moving towards a digital, in-app payment solution.
The decline of paper checks
It’s estimated that 67% of residents pay dues and fees via paper checks even though the number of overall check payments has significantly decreased over the years. According to NPR, the number of checks paid declined by more than 50% as payments through credit cards, direct deposit, and other services more than tripled between 2000 and 2012. The Federal Reserve reports that debit and credit cards have become the preferred method of payment among consumers. More specifically:
- 43% of consumers said debit was their preferred payment method
- 22% prefer credit cards
- 30% prefer cash
- And only 3% of people surveyed prefer checks
Cash is on the decline, too
The number of consumers using credit cards as their sole payment method, compared to using them to finance bigger purchases, has increased significantly in recent years. In fact, more than half of all credit card holders use their cards for everyday spending.
With the spike in credit card payments and a projected increase in digital payments (we’ll get to that in a second), checks aren’t the only traditional payment method experiencing a slump. According to the 2016 Federal Reserve Payments study, noncash payments increased at an annual rate of 5.3% between 2012 and 2015, mainly due to a jump in debit, credit, and ACH payments. Fewer Americans are using cash, which is down from 19% in 2011 to 10% in 2016.
Hello, digital payments
According to Business Insider, the total volume of e-commerce transactions is expected to rise 91% over the next five years, hitting $5.7 trillion by 2023. Person-to-person (P2P) mobile payments are becoming mainstream due in large part to convenience. 51% of consumers report that paper checks are a pain, while 68% claim that P2P payments are convenient and save time.
What about digital payments for businesses? While they’re increasing each year, they’ve been a bit slower to catch on for two main reasons:
- Small businesses are slow to respond: Only 25% of small businesses say they accept mobile wallet payments.
- Security is a big concern: Due to high-profile hacking cases, consumers worry about security when it comes to making digital payments. In fact, 37% say they’ve abandoned an online purchase due to security concerns.
What does this mean for you?
People are ditching checks for more modern, convenient forms of payment, so there’s no reason your residents can’t do the same. Fortunately, you can mitigate concerns around digital payments by implementing a trusted payment partner that’s PCI compliant, ensuring your resident’s data will remain safe. In fact, allowing your residents to make digital payments can be a huge differentiator for your property management company, especially seeing the low adoption rates among small businesses in this space.
Sure, implementing a digital payment tool will take work on your end. You will need to educate residents about this new payment option, emphasize its benefits, and reassure them that their personal information is safe. You will need to send out frequent reminders about the new tool through different mediums, including email, digital bulletins, text messages, and more traditional efforts like flyers, door hangers, and direct mail, until adoption picks up. However, remember the effort is worth it, as digital payments will ensure you’re paid on-time, every time, and will eliminate the unnecessary costs and manhours associated with processing and reconciling paper checks.
Don’t offer digital payments yet? Download your copy of our free whitepaper to learn more about how an effective payments solution will make your life easier.