Recently, a multifamily regional manager of a property in northern California reported to Domuso that they were faced with a loss of $15,000 in credit card chargebacks in a single month - from two residents alone.
One resident had disputed six months worth of rent charges and the second resident at the same property initiated a chargeback on several months worth of rent as well. As a result, the owner requested they stop accepting credit card payments altogether. However, another solution was found and the property was able to continue to accept credit card payments while removing all of the risk from future potential chargebacks through the use of digital certified funds.
This, unfortunately, isn’t an isolated incident. In the overall market, one study found that in 2019, 81 percent of individuals admitted to filing a chargeback out of convenience and a considerable percent of the dispute cases were lost. While it is less common to see chargebacks on rent payments, they are a fairly common occurrence on rental application fees and other property add-on services.
Even for a single property, chargebacks can have a marked effect on net operating income while taking a material amount of time for property managers to resolve. However, those that have moved to modernized rent payments platforms have been able to smoothly move past them.
“Managing credit card chargebacks are a thing of the past for our properties,” says Carrie Briggs, VP marketing and revenue management at FPI Management. “By having a provider that handles the dispute process for us, we are able to save an enormous amount of time and stress for our accounting teams and property managers. These time savings combined with the elimination of the financial losses have a significant impact on our properties’ NOI.”
Switching to more sophisticated digital payment platforms also means having access to a range of automation settings and alternative payment methods that reduce payment risk and can remove chargebacks altogether. With platforms like Domuso, for example, property managers can still accept traditional payment methods while offering and the ability to accept digital certified funds and setting automated payment logic to limit options for residents with a history of risky payment behavior.