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 the invoicing and receipt of online rent payments, according to Sam Yen, chief innovation officer of JPMorgan’s commercial banking division.
While digital payments have steadily taken over more of the world’s transactions, boosted in recent years by the Covid 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 running smaller portfolios of fewer than 100 units.
As a result, about 78% are still paid using old-school checks and money orders, according to JPMorgan. More than 100 million Americans pay a combined $500 billion annually in rent, the bank said.
“The vast majority of rent payments are still done through checks,” Yen said in a recent interview. “If you talk to residents to this day, they often say ‘The only reason I have a checkbook still is to pay my rent.’ So there are lots of opportunities to provide efficiencies there.”