JPMorgan Chase launches payment platform for landlords and tenants

JPMorgan Chase is betting that landlords and tenants are finally ready to ditch paper checks and embrace digital payments.

The bank is piloting a platform it created for property owners and managers that automates invoicing and receiving online rent payments, according to Sam YenJPMorgan’s Chief Innovation Officer commercial banking division.

So far, digital payments are going steady is taken by more transactions in the world have increased in recent years due to the pandemic, there is one corner of commerce where paper still reigns supreme: the monthly rent check. That’s because the market is highly fragmented, with most of the country’s 12 million property owners managing smaller portfolios of fewer than 100 units.

As a result, according to JPMorgan, about 78% still get paid with old checks and money orders. According to the bank, more than 100 million Americans pay $500 billion in rent each year.

“The vast majority of rent payments are still made by check,” Yen said in a recent interview. “To this day, when you talk to residents, they often say, ‘The only reason I still have a checkbook is to pay the rent.’ So there is a lot of scope for efficiency gains.”

They’re focused on improving the rent collection process first, because it’s “the most time-consuming process that exists today for a property owner-operator,” according to Kurt Stewartwhich manages JPMorgan’s commercial term lending for the Northeast region.

In addition to having to manually collect and deposit paper checks, landlords typically rely on decades-old software, including MicrosoftExcel and IntuitionQuickBooks for business, He said. There are new options more adapted to real estate appeared in recent years with names like Buildium and TurboTenant. According to the executive, no one dominates yet.

History will “give [property owners and managers] much more visibility across their entire portfolio to see exactly what was paid and what was not,” Yen said.

JPMorgan hopes to gain traction by offering users valuable insights through data and analytics, including how to set rent levels, where to make future investments and even help screen tenants, Yen said.

While the bank claims to be the country’s leading lender to apartment building owners 95.2 billion dollars in loans in the middle of the year, it seeks beyond its 33,000 customers in the sector.

Landlords and tenants do not need to be JPMorgan clients to sign up for the platform when it is rolled out more widely next year, Yen said. According to him, the bank has not yet finalized the commission structure for this product.

Residents can automate their monthly rent payments, receive notifications and view their payment history and lease agreement through an online dashboard. It provides peace of mind compared to sending a paper check, Yen said.

It’s part of the bank’s broader drive to create a digital experience, fend off fintech rivals and strengthen customer relationships. Under the Director General Jamie Dimonthe bank has committed to spending more than $12 billion a year on technology, a staggering number that has surprised banking analysts who urged bigger clarity in investment this year.

JPMorgan hopes to expand beyond lending to property owners to eventually capture a “significant portion” of the $500 billion in annual rental payments with its software, the commercial bank’s CEO Doug Petna told analysts in May.

“We’ve invested in building end-to-end payment and rental solutions specifically for our multifamily customers,” Petna said. “In doing so, we hope to create an entirely new and significant revenue opportunity for our business.”