When Zipmark CEO and co-founder Jay Bhattacharya’s father came to the U.S. in 1974, he started paying his rent with paper checks. That’s still pretty much the case for most renters today, though if Bhattacharya has any say, those days may be numbered.
Zipmark, a New York payment company that builds off of the existing checking infrastructure, is now putting the pieces in place to allow renters and management companies to do away with paper. The company announced this week that it has signed a deal with property management software provider Integrated Business Systems, which will make Zipmark available as a payment choice for its customers, who control about 300,000 units in the Northeast.
For property management companies who opt in, they can include a QR code on their bills, that allow users to scan them with Zipmark’s iPhone app or web app. Renters connect their checking account one time and then get notices via their iPhone app about future rent invoices. Users can pay each bill as they come in from their app or the web or set up recurring payments and the property management company gets paid the next day. Zipmark can also build a simple payment website for property managers that allows them to offer Zipmark payments online.
The deal will go into effect early next year and follows up on a partnership last month with RentShare, a rental payment portal that now offers Zipmark as a payment option. The partnerships, which Bhattacharya said will be followed by even bigger deals next year, are making good on Zipmark’s promise as a way to modernize the old rent check payment system. He said Zipmark will reach millions of units in 2013.
“What we’ve done with real estate is take out the friction,” said Bhattacharya. “There’s no reason I should be paying rent the same way my father did.”
Zipmark still faces some challenges in killing the rent check. Property managers need to adopt it. And users have to decide to pay that way. But there are benefits for both. Property management companies can get paid almost immediately and know that the funds are good instead of the potential for bounced checks. And they can get started in about 15 minutes. They need to pay 1 percent per transaction for using Zipmark, but payments are capped at $5 per transaction.
Consumers can do away with the pesky process of sending off a stamped envelope each month. Some property managers have previously offered ways to pay online but often it comes with a big credit card fee. Renters can still control when they want to pay and with Zipmark’s mobile app, they can pay from anywhere.
“The Zipmark experience is great for the payer, and our customers receive guaranteed funds on the next business day,” Mike Mullin, IBS president in a statement.
Zipmark graduated from the New York FinTech Innovation Lab last year and first considered handling all kinds of payments, including P2P and retail payments, which would pit it against PayPal and others. But in the last year, it’s narrowed its focus to B2B payments and recurring and high value payments from consumers to businesses. That makes more sense and allows Zipmark to focus on areas where it can make a difference. The company raised $2 million a year ago from NYC Seed, High Peaks Venture Capital and the New York City Investment Fund.
As someone who still scribbles out a rent check each month and mails it, I’m hoping my landlord gets on board with Zipmark. This is one of the only reasons I still use my checkbook and it doesn’t make sense in a world that’s moving to digital payments. Regulations in many cities will keep people getting invoices in the mail, but there’s no excuse why payers should have to kill any more trees to pay the rent.