Battle of the Fees
A new study urges property owners to abolish credit card convenience fees.
It’s one of the most debated questions by apartment owners who offer credit card rental payments: to charge or not to charge residents a convenience fee. A new study from Property Loyalty indicates that abolishing the convenience fee can actually provide property owners with a significantly higher ROI.
“Our research indicates that offering credit card rent payment options without convenience fees can make an apartment more attractive, thereby increasing tenant acquisition and retention,” says Lee Clark, director of research solutions for Property Loyalty, a Philadelphia-based research solutions provider. “The net result is [that] property owners can earn over a 200 percent return on investment if they bite the bullet and absorb convenience fees.”
The Credit Card Rent Payment Report, which surveys more than 200 respondents, outlines the costs and benefits of offering three credit card rent payment options–including their impact on retention, vacancies, and return on investment.
AIMCO, a Denver-based apartment owner, is a strong proponent of not passing on convenience fees to its residents. “It’s part of our approach to developing a little closer relationship with the customer,” says Michael Fortinberry, AIMCO’s vice president of resident services. But the vast majority of owners today do pass on these fees, says Ryan Gilbert, CEO of Property-Bridge, a provider of electronic payment processing services based in Oakland, Calif. And as a result, these companies are seeing significantly lower credit card adoption rates, Gilbert says. Those who charge convenience fees see adoption rates in the 2 percent to 8 percent range, while those who opt not to charge fees see a 30 percent-plus adoption rate, he says.
–Rachel Z. Azoff