Push to Debit Brings ‘Emotional Relief’ of Faster Payments to Property Management Sector

Property management always has a flurry of activity in the background.

Landlords employ and contract with a variety of vendors and suppliers to keep things running smoothly, the grounds maintained, the sinks and toilets unclogged.

Tenant turnover — where one renter leaves and another moves in — demands that rooms be repainted, scuff marks erased from floors, carpets cleaned.

And everyone, from plumbers to groundskeepers to HVAC companies and movers, needs to get paid.

Drew Edwards, CEO of Ingo Money, and Adam Feinstein, vice president of product and payments at AppFolio, told Karen Webster that vendor payments in the property management realm are due for a digital makeover.

To that end, Ingo is powering push to vendor payments — specifically, through push to debit cards — for thousands of property managers doing business on the AppFolio platform.

Publicly-traded AppFolio provides cloud-based property management services to property managers, including collecting rent payments, issuing refunds and paying tens of thousands of vendors engaged by property managers. Payments can be recurring or ad hoc in nature (as, for example, when repairs are needed).

Laying the Groundwork

The connectivity part of the equation has been relatively simple, observed Edwards, who said that “an API is an API,” but it is the other pieces to the equation from connecting sponsor banks and managing risk and fraud, to the ongoing management, optimization, enablement of low-cost routing, redundancy and ubiquity that are the real differentiating factors.

“The real work starts after implementation as you operate, and you turn it all into billions of dollars of transactions,” Edwards said.

The availability of push to debit, said Feinstein, will speed up payments themselves, reducing reliance on the paper check and the crisscrossing of invoices and approvals or the three-day wait for ACH transactions to settle — and aiding cash flow for handymen, electricians, lawn care firms and regional suppliers.

“We’re talking about hundreds of thousands of vendors,” said Feinstein, who noted that each of AppFolio’s property management customers may have anywhere from five to 15 vendors on the roster. And keeping vendors loyal is critical to keep things running smoothly.

Rather than integrate directly with the card networks for push to debit, AppFolio chose to partner with Ingo because, as Feinstein said, Ingo “knows how to move the money … and have those relationships with the networks and manage those programs.”

The Consumerization of Property Management Payments

The groundwork has already been laid, in a sense, for a wider embrace of push to debit.

Edwards told Webster that across Ingo’s client base, across a broad range of verticals, when push to debit is on offer, “it winds up accounting for between 40% to 70% of transactions. The trend’s moving away from the slower rails and the paper rails,” especially for ad hoc payments.

As Feinstein told Webster, vendors’ expectations — and desires — about how they are paid are changing. Significant progress has been made in spurring tenants to embrace digital channels (using their debit cards) to pay their monthly rent. And as individuals, pretty much all of us are familiar with peer-to-peer (P2P) payments through PayPal, CashApp or Venmo.

“But there’s been a big gap in the ability to pay, in a digital way, the vendors,” Feinstein said.

The gap is closing, said Edwards and Feinstein, who noted that vendors “are really valuing that ‘time to money’” speed that winds up helping them enjoy the “emotional relief,” as he put it, of more efficient cash flows.

AppFolio, for its part, collects a 1.75% fee for providing accelerated funding to the vendor (which Edwards noted is in line with the percentages taken by the major P2P providers).

The shift toward push to debit, said Feinstein, will lead to new opportunities to embed payments more fully into the property manager’s workflow — and artificial intelligence (AI) can be used to help automate the invoice-to-approval continuum.

Edwards noted, too, that due to the nature of fraud in checks and even ACH, the finality of a push to debit transaction happening from start to finish helps to alleviate those fraud concerns.

There’s room to bring push to debit to other use cases, such as residents getting their security deposits back faster, especially as the FedNow® Service and instant payments take root in the months and years ahead. Renters and business owners are skewing ever younger and will likely expect digital payments — and payments optionality — to be part of their relationships with property owners.

Asked by Webster what lies ahead, Feinstein said that in the move toward digital vendor payments, “we’re in the early innings — we’re seeing good adoption and we’re scaling volume.”