With the housing and rental markets undergoing dramatic changes in recent years, tenants are on the move—and whether they’re downsizing, upgrading, or trading apartment life for homeownership, they expect to be reimbursed for their security deposit quickly and efficiently. But according to Onbe’s 2022 Rental Disbursement Survey, only about a third of renters receive their deposit reimbursement within a week of moving.
Checks May Inconvenience Tenants on the Move
Why the delay in payment delivery? One big reason may be that rental companies paying via check contend with cumbersome production and fulfillment processes. Onbe’s survey found that nearly two-thirds of renters prefer to receive reimbursements through faster digital methods, including direct deposits, payment apps, and virtual cards. However, many rental companies have not yet made the transition to digital, with over half of renters reporting that they received their last reimbursement via a paper check.
Besides being slower, checks pose unique concerns for the renter community. For starters, a tenant on the move may not immediately relocate to their next long-term address. Living with relatives or in short-term housing to await settlement on a new home is common. So, mailing a check can lead to payment delivery issues. Even when the check arrives as planned, it can be lost in the hustle and bustle of moving. 18% of all renters surveyed say they have accidentally thrown out a reimbursement check, and that jumped to 31% for 18- to 24-year-olds.
Payment delays can cause financial trouble for renters counting on their returned security deposit to pay for their next move. So can the common occurrence of getting an incorrect payment. Almost a quarter of respondents had to delay a move to a new apartment because their security deposit check was for the wrong amount. And correcting the mistake was far from quick and easy—for either renters or property management companies. Of renters who were paid the wrong amount, 76% had to wait anywhere from a few weeks to over a year to receive what they were owed, with nearly 44% waiting a month or more.
Digital Payments Unlock Opportunities for Rental Companies
Renters aren’t the only ones experiencing the pain points of reimbursements that rely on checks. Rental companies face a significant administrative burden when they handle disbursements in-house, and when costs such as labor and postage are factored in, checks can cost anywhere from $3 to $12 each. Uncashed checks create additional complexity for the back office, since unclaimed funds must be escheated to the state.
By contrast, digital payments are more easily trackable and tied to the payee’s email or bank account, so ensuring that funds reach the correct recipient is a far more straightforward process. Integrating with a digital disbursement provider saves time and money for busy property management offices. By using a managed disbursement platform that offers the recipient’s choice of payment modality, rental companies could gain the flexibility they need to pay their renters quickly and accurately—whether it’s a security deposit, reimbursement for repairs, or a referral incentive. Tenants will appreciate the smoother experience, and so will the back-office team.
Today’s housing and rental markets may be in a state of flux but making disbursements to tenants should be simple and predictable. Learn how Onbe’s reimbursement solutions can help.
by Tracy Monson, Chief Product Officer
At Onbe, Tracy leverages her vast experience in digital payments and customer experiences to drive client solutions and growth.