The trust test: 10 questions to ask your rental payment provider

There are many payment applications and software providers claiming to manage rental payments on behalf of rental property practitioners, but do they really, in every sense of the word?  

The keyword with any platform handling your clients’ money is trust. Can you trust your provider to receive, store, manage and distribute payments fast, accurately and securely? Do they enable you to comply with the myriad laws and regulations involved in money handling, the standards guaranteeing information security and business continuity, and the strict protections afforded consumers? And do they meet the same regulatory requirements that you have to as a property practitioner?

To help you assess your current or prospective provider, here are the top questions that you as a rental agent should ask your payment provider or prospective provider, to be sure your trust account and its management is up to scratch:

1. Does their online rental payment system make your annual audit easier?

Audits can be stressful and time-consuming for rental agents, and a lengthy audit process can get in the way of their regular tasks. An online rental payment system that provides complete, well-organised account data makes audits quicker and easier, and yet not all platforms do so. Ask your provider how, specifically, their system helps during audit season.

PayProp-powered agencies have one huge audit season advantage that others don’t: PayProp is currently one of very few authorised Payment Processing Agents in terms of trust account exemption rules, meaning our agency customers can apply to the PPRA for exemption from keeping their own trust accounts. That means less red tape and fewer full audits – saving them countless hours every audit season.

If you prefer to manage your own trust account, PayProp still comes with some big audit season advantages. Our clients receive an Agreed Upon Procedures letter from our auditors which verifies the balances and accrued interest of their Section 54 (1) and (2) trust accounts at year-end. They then submit this to their own auditors, drastically reducing the time it takes to prepare for an audit.

2. How fast can their system pay out to landlords and contractors?

Can you currently, or does your prospective provider enable you to pay landlords on the same day the rent comes in? Or will your clients be kept waiting for their money while you struggle to reconcile large numbers of transactions spread out throughout the month?

PayProp reconciles all accounts to the cent, daily. This ensures that accounts are more accurate, and that landlords and contractors receive their payments more quickly.

3. Do you trust their compliance credentials?

Companies that handle other people’s money should be held to the highest standards of transparency and compliance, but some are still marking their own homework.  

A great way of overcoming this is to ask if your provider is a registered Payment Processing Agent under the Property Practitioners Act, like PayProp. To qualify, your provider must be registered with the PPRA, authorised by or registered as a Third-Party Payments Provider with the Payments Association of South Africa, and operate a secure and auditable trust account environment.  

PayProp also operates under the highest level of auditing oversight, having received an unqualified ISAE3402 Type 2 audit report in our latest such audit – independent assurance that its financial controls are robust and effective. As a Reapit company, PayProp also maintains ISO 27001 certification, reflecting its commitment to stringent information security management. It is worth asking other providers if they can demonstrate the same level of assurance.

4. Can their system tell you where your clients’ money is now, or where it has been in the past?

The system should offer an indelible audit log that informs you of every transaction on the platform and lets you see who made it – and that record should be saved permanently and automatically in such a way that it cannot be changed or deleted.  

Without strict fund segregation, real-time reconciliation and detailed transaction logging, funds can become untraceable or impossible to allocate to the right person – for example when tenants move out and the system allows records to be deleted, or where payment records don’t provide reconciliation details per transaction. This risks landlord disputes, Rental Tribunal cases or PPRA penalties.

5. What measures do they take to keep customer data safe?

A provider should offer bank-level security, including state-of-the-art encryption, and keep backups in multiple secure locations. Data loss – or worse, data theft – can result in huge losses to clients and destroy an agency’s reputation. Ask your provider what measures they take to prevent this.

All transactional data entering PayProp is encrypted using 256-bit SSL certificates. Stored data is kept in PayProp’s EU-hosted data centre environment and protected with rigorous physical, digital and personnel security measures. Payments are made through the National Payments System, ensuring secure, tamper-proof transactions. And if passwords are somehow stolen, PayProp has multi-factor authentication as another line of defence. Users have to confirm their identity using a one-time code sent to their registered phone number or email address, so criminals can’t access your system with a password alone. Providers must also offer robust protections against internal fraud. Ask your provider if trust accounts can be accessed from outside your agency, or if staff can change entries.

6. What’s the support like?

Does the onboarding process work? Will a real person be available to help you while you migrate to the new system? With a service as vital as payment processing, you should always be able to get timely help from a dedicated expert via telephone or e-mail.

Once you’re onboarded, is support included, or are you left to fend for yourself – while still paying your subscription fee? If support is included, what level of support does the provider actually offer – an outsourced call centre, or dedicated experts who can help you get the most out of the platform you’re paying for?  

7. How clearly are the payment platform’s trust accounts separated from one another?

Some payment service providers cut corners by pushing incoming payments to a single settlement account, but this creates a risk of paying one landlord with another landlord’s money – or even of using tenants’ security deposits to pay for repairs during the lease. Payment providers can prevent this by keeping trust funds ringfenced and separate at all times. Ask your provider if they do.

8. What is your provider’s track record in the residential rental payments space?

Don’t take providers’ marketing on trust – ask them for their credentials.

Be sure of getting the best by asking how long they’ve operated as a payment provider, who owns them, and their track record of success. As with any financial partner, it’s vital to look beyond the system to the organisation, to understand all the possible pressure points before signing on the dotted line.

While aggressively-priced payment processing systems may look tempting, particularly in uncertain economic times, they may only be able to reduce their prices by cutting corners – and with so many legal requirements to meet when it comes to payment processing, there are some corners that shouldn’t be cut.  

9. How are damage deposits handled?

Damage deposit handling is a key responsibility under the Rental Housing Act. Getting it wrong exposes your agency to legal risk, so when evaluating any rental platform, make sure it can help you manage deposits in a secure, compliant way.

Deposits should always be reconciled to the cent with every transaction, accrue interest daily, and be kept separate from business and rental funds – as they are with PayProp. Refunds also need to be made within the correct timeframe: with PayProp, they can be released in 24-48 hours, in compliance with the Rental Housing Act.

10. What does it really cost?

How transparent is the provider’s pricing model. Do you know what it will cost you upfront and on an ongoing basis, both in hidden fees or reduced benefits elsewhere?  

Low fees may, for example, be offset with lower interest earnings or hidden costs, reducing landlord returns or tenant interest.  

Also check whether the upfront price gets you access to the whole platform, or whether key features are locked away behind paywalls or premium subscriptions. Providers may artificially limit the number of platform users to convince users to upgrade, or even charge for regular system updates.

PayProp offers honest, transparent value: one platform offering end-to-end value to all customers, with transparent, predictable pricing, unlimited users, unlimited support and training, and no paywalled features. That’s value you can trust.

The bottom line: Don’t settle for less

In the end, trust is the foundation of your business. The right payment provider should deliver compliance, transparency, and peace of mind for you and your clients. When money, compliance, and client relationships are on the line, don’t settle for less than complete confidence.