A New App Will Let You Pay Your Rent With A Credit Card (But It Will Cost You)

Apartment rental app RadPad rolled out a new pay service that offers the convenience of paying your rent on your debit or credit card even if your landlord isn't signed up.

When Jonathan Eppers, Tyler Galpin, and Tim Watson founded and launched RadPad in Los Angeles last January, they wanted to offer a truly mobile and convenient way for users to search and peruse through apartment listings.

Now, just a little under a year and $4 million in funding later, Eppers and his small team want RadPad to be more than just the app renters toss aside after finding an apartment — they want it to be the answer to all their rental needs.

To that end, RadPad rolled out a new pay service today. Users can now pay their rent using either their debit or credit cards, even if their landlords are not signed up to RadPad. Renters simply input their information and their landlord's address, and RadPad sends the check.

But, this all comes at a cost. Users paying their rent with a debit card will be charged a flat $4.95 fee. But users paying their rent with a credit card have to pay 3.25% of their monthly rent, a percentage Eppers said he negotiated down as much as he could.

"If we could somehow get a fee that was nothing, we would do that," Eppers told BuzzFeed News. "But there's really no way we can avoid it. We're at about the same at Venmo, which is the lowest in the industry right now."

But the convenience, Eppers said, can definitely be worth the cost.

"What we're seeing in the rental market, especially in L.A. [is that] almost half of renters are spending over 40% of their monthly disposable income on rent," he said. "People are spending much more of their income per month and it's creating financial anxiety toward the end of the month and potentially the cash flow isn't there. Ultimately we want to give people the financial safety net by [letting them] put it on their credit card and pay for it later."

Of course, the implications of moving a payment arrangement that has historically been tied to actual, in-the-bank money, to credit, are huge and not all good. It's easy to imagine a situation in which renters accrue enormous fees and rent apartments they can't afford, a kind of month-by-month echo of the American mortgage crisis.

Eppers contends that card rewards perks — like miles, points, or cash back on purchases — could lessen the blow of paying 3.25% of your monthly rent simply to pay for rent, but those hardly seem like savings commensurate with the potential trouble users could find themselves in.

Maybe more importantly, the in-app pay service can also serve as a sort of renters' credit score and can help renters apply for their next apartment. RadPad keeps a history of users' payments, so if and when a user looks for another apartment the landlords or brokers who have listed on RadPad can see whether they typically paid their rent on time.

"What's nice is we're building a renter profile on you," Eppers said. "You'll be able to use that as a profile which doubles as your application [on the app.] For the first time landlords will see a payment history that's just based on your rent."

Eppers — who worked at Myspace and then at eHarmony before co-founding and becoming the C.E.O. of RadPad — and the rest of the RadPad team are currently in talks with TransUnion and Esperian to create an opt-in service that allows renters to incorporate their payment history into their credit score. It's something both Esperian and TransUnion are already doing with RentTrack, another service that focuses strictly on online rental payments.

Though Eppers said the company is not focused on revenue streams as of right now, he does see several cash flow opportunities down the road in addition to the income they accrue from the transaction fees. For one, RadPad plans to charge a one-time fee for prospective tenants to apply for as many apartments as they want. Other rental sites charge per application, according to Eppers.

"We see value in a couple of places," he said. "When [other rental sites] send a lead to a landlord typically the landlord pays for the lead, but that could mean that it's just a tenant that looked at their site or is looking for that type of listing. What we see a lot of value in is helping them get to that renter that moves in much faster. Ultimately landlords know what kind of renter they want. [So they can] fill out certain qualifications like age...and we'll charge them when we send them a tenant that meets those."

While this might serve the interests of landlords, it seems like another massive change the full implications of which haven't been thought through. It's not hard to draw the line from landlords who can filter potential lessees by gender or age or race or physical capability and widespread housing discrimination.

But for now, those concerns are down the line. The first step to achieving all the other plans Eppers and the team have for RadPad is to collect data on the renters through their profile and payment history. Eventually, he said, he hopes RadPad becomes the app renters use for as long as they're renting.

The question seems to be, do renters have much to gain from the app, and at what cost?

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