Property portal Magicbricks has tied up with Razorpay and HDFC Bank to allow users of its platform pay rent online through credit cards.
A person can earn reward points by paying rent, which is generally one of the biggest monthly expenses of a person, through credit card. Besides, the user will get interest-free credit for 45 days when the rent is paid through credit card.
“The monthly rent is a huge chunk of the monthly expense of any household. In today’s challenging economic environment, tenants are looking for trusted, flexible, and rewarding ways for one of the most important monthly expenditures. We have partnered with Razorpay and HDFC to offer a secured pay rent feature that addresses all the concerns for tenants,” said Sudhir Pai, CEO, Magicbricks. The deferment of a large spend which has a credit period of around 45 days also translates into a month’s interest of approximately 1%, he added.
While the current estimated market size of paying rent through credit card is around ₹3,000 crore, the real size of the market is considerably larger. There are 10 million rental residential units in India. Of these, almost 75% are in the ₹35,000 per month and less rent bracket. Within this segment, almost 50% of the properties are in the range of ₹10,000- ₹20,000 per month, Pai said.
“Cities with a large number of premium and luxury properties like Mumbai, New Delhi and Gurgaon also have much higher than national average share of rental properties both in the premium and the luxury segment. The rent for premium properties is in the range of Rs.35,000-Rs.50,000per month and luxury Rs.50,000 per month. So, this offers us a huge untapped market for our rent pay solution with a credit card,” added Pai.
Once the transaction is completed, it will take around four days for the rent to be credited to the landlord’s account. After this, a rent receipt will be issued to the tenant.
There are other online property portals such as Nobroker, Housing.com which also offer this service on their platforms.
Paying rent through credit cards can help tide over short-term financial crunch, but the interest on credit card dues, even if availing the EMI facility, is substantial. Remember, interest rates on credit cards can go up to 30% per annum. Weigh the costs and decide if you really want to opt for the option.