RadPad On Paying Rent With Credit Cards, The Future Of Mobile Payment

According to the co-creator of the mobile apartment finder, 60 percent of all renters in 2013 started looking for new homes by searching through such an app. Recently, the same company launched an innovative mobile payment service for its users, founded on the belief that the way we live and make payments — but also how we find and pay for our living spaces within the $400B U.S. rental industry — has already begun to change.

In the few months since its launch, Pay with RadPad has reportedly helped renters in 44 states pay their rent ($1600 per month, on average) via the mobile app, and is expected to process $6 million in rental payments within the month of February.

The app allows each easily registered mobile user to connect a debit or credit card to their account, set up a rent payment using their landlord’s mailing address, and authorize the company to send out a physical check for each month’s rental fee.

The service can be used manually as needed or set up to automatically recur every month, and is currently free for debit card users. As reps reported, the Pay with RadPad iPhone app has been the store’s most popular lifestyle and rental app, and accepts Visa, MasterCard, Discover, and American Express credit cards. Recently, the company also integrated its mobile payments with Apple Pay, and credits its newly launched Android app with 40 percent of the system’s user activity.

As RadPad co-founder Jonathan Eppers explained, the idea for the original rental listing site came about one Saturday afternoon a few years ago: confronted with the choice of spending his weekend chasing hit-or-miss Craigslist apartment listings through Los Angeles or accepting a friend’s invite to the beach, Eppers decided that apartment-hunting shouldn’t take as much time and work as it traditionally has done.

He noted that sites like PadMapper have “helped pioneer the mobile rental space,” but that a lack of rental property photos have often held him — and, presumably, many other would-be users — back. “I’m a very visual guy,” he said, and pointed to RadPad’s requirement that landlords supply at least three photos of each property for rent. This standard has helped attract “good renters,” Eppers said, but also a higher standard of landlord — a key factor in making the service a better option for residents. “We wanted to be the mobile marketplace for renters, the pro-renter place,” he explained.

When the team launched the rent payment system four months ago, debit users were initially to be charged $4.95 per payment, while credit card users would pay RadPad a transaction fee amounting to 3.25% of a month’s rent. The company quickly received feedback from would-be debit users who were drawn to the app’s convenience but couldn’t “justify the fee;” Eppers and his colleagues also discovered, however, that “quite a lot of credit card payers” were using the system — covering enough of the service’s costs, in fact, to allow the company to make debit transactions free and drop the credit card fee to 2.99%. Eppers suggested that the surprising surge in credit card payers may be “partly due to the economics of renting.” He explained,

One of the trends we’ve noticed is that renters are [now] spending much more of their monthly income on their rent. It used to be about a third of their income, and now we’re seeing renters spend upwards of 50% of their income every month on rent. And we’re seeing landlords allow [this], knowing how much renters are spending of their income on their rent […] and I think that’s why we’re seeing more people than anticipated signing up with credit cards.

Eppers pointed out that, earlier in his career, he faced the same constricting challenge that affects many people, and across a wide demographic spread: living month to month, and often being unsure as to whether or not a paycheck will arrive before rent is due. When compared to costly payday loans, late fees from landlords (which can rise as high as 5% of a month’s rent), and other options faced by cash-strapped renters, “the alternative [RadPad presents] can be a good one, considering that it’s only 3%,” Eppers noted. “It allows a renter who may be short one month to put it on a credit card, pay it off in a couple of weeks, or when they get paid, and then move into using a debit card [for paying rent with RadPad].”

Eppers and his team do take the issue of widespread U.S. credit debt seriously, and have discussed potentially good and bad circumstances for paying rent on credit via the site’s FAQ page and in an interview with credit-focused site Doctor of Credit. According to RadPad’s site, instances in which “it probably makes sense” to pay rent with a credit card include “[paying] your rent on time, [improving] your credit score or have a card that gives you cash back or airline points.”

As to the future of mobile payment systems, Eppers expects this method (from all-in-one digi-wallets to specific apps like theirs) to take on a much larger role for the younger set, and soon. “Younger people — call them millenials, if you want — are getting really comfortable with the idea of paying with their phones,” he pointed out. While ride-sharing, buying coffee, ordering groceries, and other small transactions are already accepted uses for mobile payment, Eppers sees paying rent as the bridge to making larger payments the same way:

Of 100 million renters, 90 million don’t have the option to pay rent by credit card, and if renters find a service like RadPad, and the trust it, and we make it convenient, then you’re going to see a huge shift of people moving into a payment model that allows them more flexibility and the convenience of [paying rent] from their phones.”

Eppers also noted that customers have been so enthusiastic about this kind of service that he’s even had requests for using RadPad for mortgage and childcare payments.

26% of people under 25 don’t even have a checkbook, so one of the biggest trends I think we’ll see in the next year and into 2016 is that more and more people will be looking for more and easier ways to pay, and rent will definitely be no exception.