With large numbers of social housing tenants without bank accounts and regular internet access, you'd be forgiven for thinking the launch of a new mobile money transfer service, Paym, would have passed the housing sector by without a second glance.
But the growth in mobile payments is not just fuelling the latest consumer craze: it's also helping to bridge the digital and financial divide and becoming an important budgeting tool, giving residents choice, convenience and control over their finances.
In 2012, a free app we launched allowed social housing residents to pay their rent with their smartphone. To date it has collected more than £50m in council tax and rent payments, and can represent between 1% and 5% of a social landlord's total transactions – a significant figure in a sector where more than 60% currently pay their rent in cash.
Paym, supported by nine high street banks, has been designed mainly for person-to-person payments (receiving money from a friend, for example), by linking current accounts to mobile numbers. But it can also be used to pay businesses, as long as the organisation has registered a mobile phone number to receive payments.
In that way it mirrors Barclays' PingIt service – launched in February 2012 – which had a number of early public sector adopters, such as City West Housing Trust, whose residents can use the service to pay their rent. Other housing associations are also developing their own applications for residents to use that include an option for them to pay their rent.
With smartphone ownership at nearly 30% and the launch of Zapp later this year (which will also allow for person-to-business payments), mobile money is going to be available to the masses and should become an important tool for landlords to accept rent.
There is compelling evidence of the benefits mobiles have to offer. Payment amounts are typically higher and less frequent via mobile phone app compared with cash payments. Rent payments made by app are typically around £140, whereas cash is typically half that amount. Mobile payments can speed up rent collection and landlords can send payment reminders via text message or push notification.
Analysis also shows that it is being used by residents to 'top up' larger, less frequent payments, for example a monthly direct debit. In this sense, residents like the control they have with a mobile payment which more closely mirrors the control they have with cash: the frequency, amount and time of payment is down to them. For shared housing tenants mobile acceptance is a convenient way to split housing costs, and was cited by Barclays as one of the most popular uses of PingIt by its customers.
As payment by smartphone becomes a more popular tool, councils and housing associations will need to ensure they can reconcile payments to the correct accounts when cash is being received from multiple sources.
Long gone are the days of the old fashioned rent book. Social landlords need offer more than one payment method, and it's safe to expect new ways to pay will be built around changing customer habits and behaviour. So landlords should get savvy now and review their payments to ensure they cater for all tenants' needs. This will increase the probability of getting paid on time.
Ross Macmillan is market intelligence consultant at Allpay
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