Circa wants to personalise the rent payment schedule

Residential rents are paid on a fixed date in the lease (usually at the beginning or end of the month). This practice is becoming increasingly common in France and the United States, where a technology company called Circa intends to change this. In a responsible approach, its solution is committed to making rent payments more flexible, by customising the schedule or split payments.

FACTS

• Circa is a US fintech that has created a mobile platform for borrowers. It offers payment options to modulate the repayment of mortgages and other loans.

• Now it is expanding its proposition to also address US residential tenants and landlords. The promise is simple: to make rent payments more flexible by allowing them to choose the date of collection or to make instalments rather than a single payment.

• User journey:

  • both tenants and landlords create an account in minutes;

  • Tenants can choose their payment method and customise their payment schedule by splitting the payment into up to 4 instalments, without affecting the landlord's payment;

  • the tenant can also modify his payment plan at any time;

  • notifications can be sent by Circa before each payment so that the user can check the status of his account and make a last minute modification if necessary.

• Business model:

  • Circa charges landlords $1 per month for each lease submitted to its SaaS platform;

  • a fee is charged to tenants when they use the deferred or split payment service; half of this fee is returned to the landlords.

  • Circa also offers additional services to landlords (credit reports and delinquency management tool).

ISSUES

• An inclusive solution: nearly 6 million tenants are reportedly affected by late rent payments, representing $41 billion in arrears each month in the United States, according to Circa's co-founder and CEO, Leslie Hyman. In addition to the trust issues that arise in the tenant-landlord relationship, these delinquencies lead to a decline in tenants' credit scores and a risk to their continued tenancy. It also estimates that among the large American insurers, nearly 20% of the deductions made on the 1st of the month fail and must be re-scheduled.

• A service to landlords: Circa insists on the win-win nature of its offer. Facilitating the payment of rents indeed avoids unpaid rents and represents a real advantage for landlords and owners. Indeed, according to its estimates, evictions generate costs of between 3,500 and 10,000 dollars and only 17% of collection procedures are successful. Hence the value of introducing flexibility to keep tenants in place.

PUTTING IT INTO PERSPECTIVE

• Fragmented payments are emerging everywhere as a new financing model that can make it easier for consumers and businesses to manage their finances.