Thought Leaders in Financial Technology: Karthik Manimozhi, CEO of RentMoola (Part 2)

Karthik Manimozhi: COVID has created some real structural and institutional issues. Certain sections of the population are disproportionately affected by COVID than others. What we’ve seen is three waves hitting the rental market.

Wave one, we saw an increased demand for automation. The landlords could not staff their front offices. The renters required contact-free payments. There was a real demand for online payment methods. In addition, landlords didn’t want to touch physical things like checks and cash.

Wave two happened around April. What we started to see is disrupted economic activity. It resulted in a high-level of uncertainty. People did what they normally do when they feel uncertainty – hold on to cash in their bank accounts. We saw a 30% to 40% increase in renters using credit cards and debit cards to pay rent.

COVID is still an evolving situation in the rental market. Over the last couple of months, we’ve hit wave three. There is uncertainty around unemployment and government support checks.

Increasingly, renters are figuring out that when they use their credit cards to pay the rent, all they did was push the problem out 30 to 60 days out. Now they owe rent with interest. Last but not the least, the disrupted economic activity continues to put a lot of pressure on the common household.

One of the features of wave two was landlords and lenders coming together and providing provisions for deferring your rent. The renters did benefit by deferring their rent hoping to overcome the uncertainty. The lenders gave the landlords a bit of time for their mortgage payments.

Over $21 billion in past due rent needs to be collected, which puts significant pressure on the common American family. 

Sramana Mitra: The $21 billion is on your platform?

Karthik Manimozhi: These are the numbers for the whole of US.

Sramana Mitra: How much on your platform?

Karthik Manimozhi: We processed over half a billion on our platform. We do over half a million transactions annually.

Sramana Mitra: But how much of past due rent is on your platform that you have direct visibility into?

Karthik Manimozhi: That’s a bit of a tricky question. There is some confidential data we can’t go into. Mostly what happens here is, we provide flexibility to tenants. In some cases, they use their credit cards and debit cards to pay rent. In some cases, they work on payment plans with the landlords.

We have a big exposure in Canada compared to the US. 35% of our install base is in the US, but it’s rapidly expanding, and 65% is in Canada.

Sramana Mitra: The Canadian story is much cleaner than the US story?

Karthik Manimozhi: I would think so. There is a little bit more stability in terms of government support in Canada. Traditionally, Canadian renters use pre-authorized debit and bank transfers more often than credit cards. They do use online platforms, but their choice of payment is more around savings and capital bank accounts rather than taking on line of credit.

In the US, generally, the population is more used to credit cards. A big part of that is the fact that credit cards here provide better cashback opportunities. It’s a common practice to pay and take advantage of cashback. 

This segment is part 2 in the series : Thought Leaders in Financial Technology: Karthik Manimozhi, CEO of RentMoola
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