Big property owner and management companies have long had options to accept digital payments from tenants, but the innovations just keep coming from new entrants and payments players who see the multi-million-dollar market as a lucrative target.

The upstart Stake, founded in 2018, is betting property owners will pay to offer cash-back benefits to their renters through a loyalty program. The company entices large property owners to pay for Stake’s cash-back loyalty program by showing them it pays off in reduced rent payment delinquency, increased lease renewal and even assistance with property maintenance.

“Across big portfolios that delinquency can be problem, so we give the cash back — you only get the cash back when you pay the rent — so we reduce delinquencies,” Stake CEO Rowland Hobbs said in an interview. “If you have a 5% delinquency rate, or 5% bad debt, that's a significant loss across all of (the properties) and if Stake can reduce that 5% to 2.5%, you’ve saved a lot of money.”

Property technology companies such as Yardi Systems, RealPage and AppFolio carved out a niche in property management digital payments over the past several decades, but there are many ways that companies like Stake are differentiating services in the market.

As part of the Stake loyalty program, which most renters opt to join when given the option, property owners also are able to renew their leases more readily so Hobbs argues a property is off the market for shorter periods. And finally, the renter can sometimes earn cash back by participating in maintenance tasks, like changing an air conditioner filter, he said. 

The property owner pays a fee to Stake that is equal to 10% on the cash paid back to the tenant, but there are discounts based on transaction volume, a spokesperson for the company said. So, generally, for a renter that is receiving $100 back, the property owner pays Stake $10. On average, the payment for Stake’s services amounts to about 4% of the rental payment, Hobbs said. Still, he contends the services ultimately provide savings to the property owners.

“On average, $1 spent with Stake returns $2.11 to a landlord because it saves money when renters take action,” he said.

For the renter, the cash-back benefit is coupled with a Visa debit card that provides a no-fees savings account. 

Tenants who live in Stake’s clients’ properties tend to work multiple jobs to pay an average monthly rent of $1,100 so a cash-back program and the bank services are meaningful for them, Hobbs said.

Stake already has 30 property portfolios in 25 states, with Texas and Georgia as its largest markets, equating to 20,000 homes producing $350 million overall in annual lease payments. The company tends to work with bigger asset managers. While its sweet spot has been in the Sun Belt where there are a lot of renters, it has the ability to work in all 50 states, Hobbs said. Over the next year, he sees more opportunity in metro areas and higher rent properties.

Stake, with dual headquarters in New York and Seattle, raised $12 million in new funding last month and has raised nearly $18 million overall.

For Stake and its competitors, the target audience is a large one with some 44 million U.S. households paying rent and generating some $600 billion in rental payments annually, Hobbs said. That’s about a third of Americans renting their properties.

Aliaswire is another company dipping its toe in the rental payments market. As a direct-biller business, Aliaswire is practiced in managing recurring payment flows, such as rent, as part of its white-label services provided to banks.

With renters who share units often using a wide range of payment types today, Aliaswire management saw an opportunity in providing those tenants a way to split their rent payments into varied streams of payments.

As a result, it devised a service by which renters can each pay the bill directly in whatever form they choose, whether that’s with a debit or a credit card, giving them more control over the payment, Aliaswire CEO Jed Rice said in a recent interview.

For the property owners and managers, there is a benefit in better data management and more insights into understanding the patterns of when payments are coming, allowing for a smoother overall flow of payments, he said.

The company's customers include Citibank, MUFG Bank and BMO Harris. 

While this payment service category only makes up about 10% of Aliaswire’s Burlington, Massachusetts-based business, Rice expects the extensive money flowing through rental and condominium payments makes it a rich area for growth.

“The way we see this is that there is hundreds of millions of dollars of transactions on a monthly basis that we can get access to here,” Rice said.

Aliaswire, which was founded in 2001, raised about $8 million last year and is angling to raise additional funds from its bank customers, he said.