Why Renters Are Using RadPad Instead of Payday Loans

If pulling out your checkbook to make your monthly rent payment feels like something out of the dark ages, then this hot Santa Monica, Calif.-based startup might be offering the fix you need.

RadPad lists apartments and homes available for rent, but in 2014, the company launched the “Pay with RadPad” feature that allows users to pay their rents using their phones with a debit or credit card. More recently, the company made it possible to pay rent via Apple Pay, reports Business Insider.

With a single tap of the finger, your debit or credit is charged, and RadPad writes and mails a check to your landlord. Users might love this simplicity and convenience, but it seems that many are also using the service to bridge the gap between paychecks.

Can RadPad Replace Payday Loans?

RadPad is free for users who pay rent using a debit card under $5,000, but there is a 2.99 percent charge for credit cards. For renters living in high-cost areas, that cost is steep. For example, a user who uses a credit card to pay $2,500 in rent will incur nearly a $75 fee.

Despite this fee, RadPad sees “quite a lot of credit card payers” using the credit card system, reports PSFK. RadPad co-founder Jonathan Eppers told PSFK, “One of the trends we’ve noticed is that renters are [now] spending much more of their monthly income on their rent. It used to be about a third of their income, and now we’re seeing renters spend upwards of 50 percent of their income every month on rent.”

When compared to expensive payday loans or late fees from landlords, cash-strapped renters might see RadPad as a more affordable alternative since it allows them to use their credit cards to pay for rent. “It allows a renter who may be short one month to put it on a credit card, pay it off in a couple of weeks, or when they get paid, and then move into using a debit card,” explained Eppers.

Read: 7 Ways to Get Quick Cash Besides Risky Payday Loans

RadPad Grows in Popularity Among Renters and Investors

So far, renters and investors alike are jumping on the RadPad bandwagon. L.A. Biz reports that the company has hit 1 million downloads and secured $9 million in Series A funding, which brings RadPad’s total financing to a whopping $13 million.

According to L.A. Biz, more than $8 million in rent payments have been made through RadPad since “Pay with RadPad” launched in October. Meanwhile, Business Insider reports that RadPad has processed a total of $60 million in rents through its Android and iOS apps so far this year.

Vadim Tarasov is the managing director of Altpoint Ventures, an investor in RadPad. He described the company as “consumer-centric,” and said RadPad is “disrupting an entire market, which has been slow to adopt new technologies.”

“One hundred million renters in America pay more than $440 billion in rent annually,” Tarasov told L.A. Biz, “and those under the age of 40 make up more than 60 percent of tenants. RadPad uniquely addresses this immense segment of the market with a mobile, visual and increasingly social user experience that is with renters through the entire duration of their home and apartment rental years.”

It seems the time is ripe for RadPad, which is delivering a much-needed service to a market that’s begging for innovation.

This article originally appeared on GOBankingRates.com: Why Renters Are Using RadPad Instead of Payday Loans

This article by Morgan Quinn first appeared on GoBankingRates.com and was distributed by the Personal Finance Syndication Network.