This story is part of the series on financial services industry, with a focus on financial technology (fintech). You can learn more about export opportunities in this fast-growing space here.
The Postrehovsky brothers were confident of two things when they launched RentMoola in April, 2013: young people would choose the convenience of online rent payments over cheques and; it wouldn’t take long for the company to expand into the U.S. market.
Many “students don’t even know what cheques look like, so for them it’s a given that they are going to use the service,” jokes RentMoola’s chief operating officer Philipp Postrehovsky, who founded the fintech firm with his brother Patrick.
RentMoola, which is based in Vancouver and has an office in Toronto, provides a global payment network that allows people to pay rent and condominium fees using a credit or debit card. The renter or condo owner pays a small service fee, but is also eligible for points and perks if a credit card is used.
Earlier this year, the company opened its first U.S. office in San Francisco to take advantage of the area’s pool of sales talent and what Postrehovsky calls “the fundraising capital of the technology world.”
RentMoola’s new presence south of the border reflects a realization of the Postrehovskys’ vision for the company from the beginning.
The company concentrates on signing-up medium-sized property managers with 500 to 60,000 or more units. Working with RentMoola, property-management companies can receive rent from tenants and payments from condo owners online. The firm now boasts clients in 400 cities across Canada and the U.S.
“From day-one we had a U.S. version of our site,” Philipp Postrehovsky says. “It’s the small things, like the spelling of cheque. It’s ‘c-h-e-c-k’ in the United States. If you spell it the Canadian way in the United States, they have no idea what it means.”
Despite some differences, the U.S. remains a relatively approachable market for Canadian firms.
“There is a lot of relationship building that goes on between Vancouver and Silicon Valley. So a lot of people go there. It is often the first step for Vancouver companies to set up when they think about branching out,” says Christine Duhaime, executive director of the Digital Finance Institute, a Vancouver-based fintech think tank.
Despite the familiarity of the U.S. market, Canadian fintechs nevertheless face some challenges.
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For example, most fintech companies that make the move to the U.S. find its regulatory regime stricter than Canada’s, says Duhaime, adding that compliance “is more onerous and therefore more expensive for fintechs.”
Postrehovsky says the company also faces a larger number of regional competitors in the U.S., so it strategically targets markets like Phoenix, Seattle, and Dallas where it has a stronger competitive advantage.
Postrehovsky says American fintech employees have different expectations compared to Canadian staff. For example, titles are important, says Postrehovsky. “You need to give people a VP title even though they’re not really doing the work of a VP.” The firm’s first U.S. employee didn’t work out.
With thousands of banks operating in the U.S., banking also requires greater diligence, especially to mitigate fraud risk, says Postrehovsky. “We’ve had a very small occurrence of fraud, but any time it’s happened it’s always been in the U.S.,” he says.
Naturally, the U.S. market also promises massive advantages. Size is an obvious one, but so too is the maturity of its property-management industry.
“They are looking for different solutions and they’re more open to online payments,” says Postrehovsky.
The wide variety of technology being used south of the border is another upside that supports RentMoola’s business model. For verifying bank accounts, “we have a solution that works in the U.S., but we haven’t found anything like that in Canada,” notes Postrehovsky.
Among RentMoola’s other innovations is RM Cash, a new product that responds to a unique demand of the U.S. population: close to 10 per cent of U.S. households don’t use banks at all. With RM Cash, people can pay their rent in cash at 7-Eleven stores.
The willingness among U.S. property managers to embrace technology has already inspired RentMoola’s next product, Propertii. It will help property managers with lease-signing, tenant communication and document storage, among other things. RentMoola hopes to launch Propertii by the end of the year.