Collection Gateway Vs Payment Gateway: What to choose for your Housing Society

Collection Gateway is a sub-optimal method of collecting maintenance charges in housing societies, which many management committees are choosing, due to lack of awareness. Read on to know how it differs from a payment gateway solution and the reasons why collection gateways never becomes successful in housing societies.

The secret behind well-run Housing Societies and Apartment Owners Associations is efficiency – getting the best in each function while achieving overall cost control. 

One of the most important functions of an Association/Society is Billing and Collection of Maintenance Dues.

While most traditional societies have stopped collecting by Cash, they still use Cheque. Soon most Societies realise that cheques has their own set of issues; high handling cost of around Rs.75+ for each Cheque, residents hardly maintain updated cheques these days, etc.

Many societies also accept direct money transfer – NEFT, from each Resident.

For the NEFT process the Society struggles with Reconciliation issues and Residents suffer delayed Receipts issue. In many cases manual errors are made during making payments, which causes unnecessary hassles for Residents.

The best solution now available for Societies is the Payment Gateway, which is a Standard and used by every Corporate or even SMB.

Unfortunately for Housing Societies, which is run by Management Committees who volunteer their time, a non-standard called “Collection Gateway” is being pushed, which takes Societies a step back in the Cashless Collection functionality.

Though most Societies see through the reality of Collection Gateway, and readily choose Payment Gateway, some Management Committees may fall prey to it due to lack of awareness. They then have to drag this sub-optimal solution through their tenure while the best solution was within their reach. 

First let us understand how the Payment Gateway for Societies work.

What is a Payment Gateway?

Payment Gateway is a 100% automated solution favoured by every mainstream organisation – not only by e-commerce but also by IRCTC, Government Tax Payments, Trusts, Associations, Utility Departments, etc.

To setup a Payment Gateway, the Association simply provides their existing Bank Account details which is integrated by ADDA with a leading Payment Gateway service provider.

It provides 100% Automated Collection process with below features:

  1. Apartment Residents views their maintenance bill on the ADDA App or the ADDA portal and on same screen clicks “Pay Now”.
  2. Resident pays by Credit Card/ Debit Card/ NetBanking.
  3. Resident receives the receipt on same screen immediately.
  4. Money reaches the Association Bank via the Payment Gateway.
  5. With ADDA, an automatic Entry also happens in the Society’s book of accounts immediately.

The end-to-end transaction happens as one integrated, and seamless process.

Net Result of Payment Gateway:

  1. ZERO Effort on part of the Association.
  2. ZERO Possibility of Manual Error. 
  3. Single Click for the Resident.
  4. Any dispute from Resident, regarding payment made but not reflecting will be answered by ADDA itself as the full process is end-to-end integrated.
  5. Most Residents today use Payment Gateways or Wallets for paying Flight/Train tickets, Movie Shows etc. They would trust the familiar process and transact easily.
  6. The Association can change their Bank Account any time. ADDA just re-aligns the Payment Gateway to the new Bank Account within a working week!

ADDA Payment Gateway

 

“The Income Tracker and the Payment Gateway features really helped us in streamlining our maintenance collection and identifying the defaulters. In couple of months the defaulters count had decreased a lot,” says Mr. Romit, Moderator, Aspen Woods, Bangalore

 

“ADDA Payment Gateway has so far helped us to improve our collection from 60 % to 87 % . It was a seamless journey and we are a very satisfied customer,” says Mr. Rajarshi, Secretary, Uttara Tritiya, Kolkata

What is the need for Collection Gateway when Payment Gateways exist?

Many Banks today desire to have the Bank Accounts of High-End Housing Societies. 

When they approach Societies the Societies desire Payment Gateway from them. 

However Banks cannot provide all options that a Payment Gateway can, with the kind of affordable transaction charges and specialised technology that a Payment Gateway provides.

These Banks tries to get the Bank Accounts of the Societies by offering a compromise solution called Collection Gateway. 

Some Society Management Portals also provide this when they cannot provide a 100% automated Payment Gateway solution at affordable transaction charges, over web and mobile.

What is a Collection Gateway?

Collection Gateway, simply put is the same direct NEFT that Association is trying to avoid. The only difference being, every Resident is given their own Unique Bank Account Number to which the transfer the money instead of directly into the Society Bank Account. 

Making each Resident transfer to their own Unique bank Account number right away makes this Solution impractical to most Associations.

Process of using a Collection Gateway:

The Society has to first open their Bank Account with the particular Bank that is providing this Collection Gateway.

This Bank then provides a Specific Bank Account Number that is Unique for each Flat. So if your Society has 300 flats, 300 Bank Account Numbers will be given to the Management Committee. These are called Virtual Bank Accounts.

The Management Committee then has to ensure each Owner/Tenant is aware of their own Virtual Bank Account number. This is either done with a door-to-door campaign so each Resident is aware of their specific Virtual Bank Account number, or it is left to them to find it in the next Maintenance Bill detail.

Below is how the Collection using Collection Gateway Works:

  1. Resident receives his Maintenance Bill Online on the Society Portal. He/She has to find the Virtual Bank Account number in the Bill.
  2. Resident then opens another browser, and logs into his/her Bank account. The Resident has to set up this Virtual Bank Account number accurately. <Possibility of Manual Error>
  3. Resident has to note the total Amount to be paid and type it correctly to make an NEFT to the Virtual Bank Account. <Possibility of Manual Error>
  4. The Society Bank Account shows this NEFT with the Flat Number present in the Narration. This NEFT details now have to be entered in the Accounting Portal, which is done either manually or a file transfer done by the Bank once a week. 
  5. Upon the NEFT transactions being entered into the accounting portal, the Resident receives the Receipt (If any housing society software provider is promising you an instant receipt then please ask for details of how this would work.)
  6. Every new Move-In – Owner or Tenant has to be made aware of the specific Virtual Bank Account number which they must set up to do this process. Many errors happen in this area. E.g., a new Resident often asks his/her neighbour, what is the Society Account to pay their Maintenance Due. A less aware Neighbour may just share the “virtual account number” not knowing that it is specific only to his flat. Management Committee now has to detect such errors and correct them. <Ongoing Possibility of Manual Error>

Net Result of Collection Gateway:

  1. Association does not have flexibility to choose bank account providing the best Interest rates or has to maintain one extra Bank Account. 
  2. There is an ongoing effort on part of the Association supervising the NEFT uploads/reconciliation, issue of receipts in time.
  3. Residents have to followup with the Society Office for Receipt as it does not come instantaneously
  4. Effort on part of the Association to rectify the errors possible on steps #2, #3 and #6 above
  5. If the Association is not happy with the Bank and wants to change, it feels stuck. The migration becomes a high admin cost task, as it has to first inform each Resident to STOP paying to the Virtual Bank Account. Then it has to inform the Resident the new Virtual Bank Account numbers they should pay to.

All these gear up the Collection Gateway to be a failed initiative used by very few.

Below is a tabular representation which highlights the difference between collection gateway and payment gateway.

Payment gateway Vs collection gateway comparison chart

Here are some more testimonials from our happy customers who reduced the number of maintenance payment defaulters by a large number, after implementing payment gateway.

“Earlier our maintenance charge collection was about 85% in the Billing period. After using ApartmentADDA Payment Gateway our maintenance charge collection has gone to 100%.”, says Mr. Manoj, Secretary, Urban Nirvana, Pune

“ADDA Payment Gateway helped in realising the arrears of maintenance collections from many residents. Realisation of a major amount is from non resident owners as they are able to see their Due details online and are also clearing the due via payment gateway integrated with our accounting system maintained in ApartmentADDA.” says, Mr. Sriharihararanganathan,Treasurer, Asvini Amarisa, Chennai

If your Apartment Complex still doesn’t have an Online Payment Gateway so Residents can pay Maintenance by credit/debit card or Net Banking, please let ApartmentADDA help you there.

Please get in touch with us and we can get you started on payment gateway right away.

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