Property management applications are extremely popular today. There is rarely a week that goes by where we are not contacted by a software application that serves property management in some way or another. Often, we are discussing payments solutions with many at one time.
They all have varying business models and requirements, but there is one consistent requirement; they all require an ACH API Platform Solution. The reasons ACH processing is a key requirement is that the property management space has transactions of a recurring nature, the space is very low risk and the transaction amounts are higher than other typical subscription based applications, thus savings from processing costs are extremely high versus credit or debit card payments. That said, providing them with the API documentation that will facilitate the integration is often a small part of the equation in achieving their ultimate payment integration goals.
The on-boarding process of landlords, or in some cases, vendors, is a typical talking point in discussing solution options with stake holders of a SaaS property management application. It's common for minimal friction in the boarding process to be a requirement. Solutions such as Managed Payment Facilitation and ACH Payment Facilitation are payments solutions that can provide for frictionless boarding. Those solutions can work fantastic for established applications that have an existing base and acceptable transaction volume. However, many property management applications that we speak with are either in the startup phase or just don't have quite enough volume to qualify for managed facilitation.
Traditional payment facilitation is an option, but there is an arduous underwriting process to become a payment facilitator and the financial and dedicated employee resources are substantial - to the degree that only very significantly backed organizations would find their way in achieving such status. And should they achieve that goal, it's likely that they would consider managed facilitation at a later time.
So what is the solution for a property management application that's relatively new and wants to compete with the big players, meaning they needs to have the friction in boarding reduced to a level that their offering is as attractive? There are a few options here.
First we need to understand that with a typical ACH merchant account that each merchant applies for and is underwritten by the processor. There are hard costs with the underwriting process. There are also monthly support fees that are incurred. In the property management SaaS space, a landlord incurring these fees won't help with adoption. In fact, they would harm. What we typically try to do is create a tailored plan that eliminates these fees by imposing a minimum processing fee. The application process can be presented on the platform site, allowing a white label appearance, and because the property management space is a low risk space, instant on-boarding achieves a 70% or better rate. The 30% that doesn't make it is typically due to an error in the application data that is passed, requiring a manual review. These errors are usually easily corrected and the merchant can be boarded a shot time later.
Another possibility would be for the SaaS to perform the underwriting themselves and assume the transactional risks. With a solution like this, the platform would be responsible for instituting their KYC procedures and having them approved. This can allow for what is a payment facilitation model in terms of boarding, but instead of the master payment facilitator of a managed facilitation model managing and accepting the transactional risks, the platform takes on that burden. This can be an extremely attractive solution for some platforms, but understand that it will also require a reserve on deposit. The additional costs would be gateway and processing engine expenses.
If your property management application is considering ACH integration, contact us and allow us to assist you in navigating your way towards the right ACH API integration solution for you and your application.