Inflation may be a windfall for rent-payment startups

Rental fintechs have reported increased demand for their services, including cashback on rent payments and rent discounts, due to rising rental prices and inflation. Rent has increased by 11.6% over the past year, according to Harvard University’s Joint Center for Housing Studies.

Why should we care?
Greater demand within this pocket of fintech may be good news for insider companies, but it might be a warning sign to fintechs operating in other sectors. Stake, for example, a fintech offering cashback on rent payments, proudly proclaimed in June that 65% of renters have more money in their Stake account than any other bank account. While that might sound like a promising development for Stake, it may also signal how rent-burdened the average consumer is—leaving far less money for savings, eventual homeownership, or other concerns. This is both a troubling development for cash-strapped consumers as well as a potential threat to fintechs working in savings, retail payments, and other related niches. And, what’s more, while oil prices—as Paul Krugman notes—are on the decline, rent payments are locked in for the period of a lease, meaning rental fintechs may see spikes in demand far beyond the end of this “inflationary period.”