For those of you who have the capability of ACH (direct withdrawal from the tenant's bank account) what percentage of your auto-charge tenants are ACH and what percentage credit card billing? We do not do ACH at this point and I am wondering if this would be cost effective for us to offer. It does cost less than credit cards per transaction, but you have to pay for the software module to run it. So ultimately it doesn't make financial sense for us unless a large number of our tenants would be willing to switch.

Kim

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Kim Howard
Manager
FCI Self Storage & Custom Police Vehicles

Hi Kim,

Acceptance of ACH depends on how you present it.

Customers pitch ACH without mentioning credit cards. Point out ACH is a great way to avoid being late; to avoid going to the store. Let customers know the obvious: you stop drafting when they move out; health clubs and churches use ACH; it's safe.

Many owners are agressive about ACH.

One owner collects 20 per cent of rent in ACH every month. Savings in credit card fees by using ACH: over $1,000 per month.

What's next, your management software should make ACH easy. It should not only auto draft but also give you a list of customers 2 or so days after you draft of clients whose bank account was under-funded. Draft and feedback olf the draft (2 days later) should all take place in your management software.

Hope that helps. Call me to chat further.

Thanks again,

Markus Hecker
SiteLink Software
919 865 0789 x1
markus@smdsoftware.com

Hi Kim,
The term "ACH" is often used in a general sense (even by vendors in our industry) but there are some specific things to consider regarding your business.

If your business accepts credit cards you probably already do the following without really thinking about it: you accept credit cards from tenants in the store, you have an authorization form for tenants who want to sign up for automatic payment and you accept credit card numbers for payment over the phone. In the ACH world, you can do all of these as well but they aren't seen as equal.

For example, you can offer tenants an authorization form for automatic payment. Most of our clients would agree that tenants who are willing to do auto pay by credit card are open to auto pay by bank account as well. This is where you can save on fees. (Some tenants won't ever agree to auto pay in any form.)

However, you also have the ability to convert the checks that arrive in the mail, from a kiosk, or those written by tenants in the office into Electronic Funds Transfers (EFT). This means that you no longer deposit the paper checks at your bank - they are submitted electronically. Depending on the volume of your business this might be another way you can reduce costs beyond the fee reduction by saving time and keeping managers in the office rather than running to the bank. And an EFT will clear ahead of a paper check which gets you your money more quickly.

When I get into a conversation about the ACH Network I make sure to distinguish between Check Conversion (paper checks to EFTs) and Automatic ACH Payment (no paper check).

Although these appear exactly the same from the perspective of credit cards, they are quite different in terms of ACH. I've written further about this and published a few pages that drill down into detail on this on our website if you would like the link. You can also visit www.nacha.org although this site is generalized and doesn't deal specifically with our industry.

Good luck! There is a lot of momentum behind the shift to ACH right now so it's a good time to be learning about this. Any property that does a high volume of automatic credit card payments should consider ACH Automatic Payments - the savings will quickly pay for any additional costs.