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What is payroll data and how it benefits proptech companies

Pinwheel Team

March 14, 2022

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Identity, income, employment history — all of this information is highly valuable in the tenant screening process, and it all falls under the umbrella of payroll data. Until recently, this data was locked away inside payroll systems, inaccessible to third parties.

But now, thanks to platforms that integrate with payroll systems, businesses in the proptech (property + technology) space can leverage consumer payroll data to create a better tenant screening process. And what’s more, they can connect directly with those platforms to offer innovative payment products.

Both landlords and tenants are set to benefit from payroll-powered innovation, which can automate manual processes and lower the risk of fraud.


What is payroll data?

Payroll data refers to information such as compensation, hours worked, bonuses, and time off. It’s the foundation of consumer financial data that businesses across different verticals can use to improve their underwriting models. Thanks to APIs, third parties can now pull consumer data from payroll systems, making it easy to verify an individual’s identity, income, and employment.

It’s important to note that when we talk about payroll data, this includes not only traditional payroll systems but any way a person gets paid. Accounting for non-traditional work is crucial since 30% of Americans between the ages of 18 and 29 earn an income on gig platforms, while 7.1 million work in the creator economy. Any API platform that connects to payroll systems should also have extensive coverage of other income platforms in order to create a complete financial picture of a rental applicant.

Pinwheel’s API can retrieve information on:

  • Employment (including employment status, start date, and the employer’s name)
  • Identity
  • Income (hourly wage or annual salary)
  • Paystubs (recent and historical data)
  • Shifts

Our API pulls accurate and detailed consumer information, ensuring high data quality. And we’re constantly working on improving the quality of our data and building a system that can quickly flag any anomalies that need attention.


How payroll data benefits proptechs

Reliable employment and income data are essential to proptech companies’ tenant screening processes — it’s the first step to determining whether a rental applicant will be a suitable tenant. But proptechs can also leverage payroll connectivity to simplify how tenants pay rent.

Speeds up the tenant screening process

Before approving an applicant for a lease, every landlord conducts a tenant screening process to determine the risk of taking on a tenant. Landlords need to know: Are they misrepresenting their income on their application? Are they employed, and can they afford rent? Payroll data can answer those questions quickly, expediting the process for both tenant and landlord.

API solutions retrieve income and employment data in a few seconds, allowing landlords to process applications faster. And faster screening leads to a better tenant onboarding process, which increases their satisfaction and ensures the landlord-tenant relationship gets off to a good start.

Proptech Findigs, a Pinwheel customer, has leveraged our API to create a much faster application process with automatic income verification. When applicants need to manually submit bank statements and paystubs, it has a direct impact on their perception of the landlord. The company’s research has found that the average tenant rating for ease of applying was a mere 2.7 out of 5 stars. With API-powered automation, however, landlords no longer need to rely on manual processes, resulting in improved tenant satisfaction.

Prevents bad data and fraud

Manual identity and income verification processes can impact applicants beyond just costing them time. Many landlords rely on third-party tenant screening services that often disqualify suitable tenants based on wrong information. Payroll data, however, can ensure proptechs offer an accurate applicant screening process.

Because of flawed screening processes, countless applicants are unable to find housing, which is especially damaging to low-income individuals with fewer options. But with an API, proptechs can use reliable payroll data to verify an applicant’s eligibility.

Another core advantage of payroll and income data for proptechs is minimizing the risk of fraud to landlords. A 2020 study found that 66% of property managers were victims of fraudulent applications while 41% say fraud is “somewhat to extremely common.” APIs such as Pinwheel’s pull data directly from payroll platforms, so applicants are unable to manipulate it.

With a smooth and error-free screening process, proptechs can attract more landlords and tenants to their platforms. And with this functionality, proptechs can become a complete solution for anyone looking to rent (and rent out) a property.


Payroll connectivity powers easy rent payments

Proptechs that connect to payroll platforms aren’t just getting helpful data; they’re getting a new way to make payments. Although the majority of tenants pay rent using money transfer platforms, many still use checks (22%) and cash (20%). Here lies a major opportunity to automate this process using payroll, allowing proptechs to become a one-stop shop for landlords and tenants.

With a direct deposit switching solution, a tenant can connect to their payroll or employer platform, input the rent amount, and the API will ensure that payments are made on time every month. Landlords don’t have to chase down rent checks, and tenants don’t have to bother with manual payments.

Proptech platforms can also use a direct deposit switching API to allow tenants to pay rent in installments. Such flexible solutions are especially convenient for individuals whose payment schedules don’t align with the date their rent is due. In this case, the proptech could cover the rent costs on behalf of the tenant, who would then pay the sum back in two or more installments over the course of the month.


Pinwheel simplifies income data checks for proptechs

Proptechs that tap into payroll information allow both tenants and landlords to benefit from a streamlined and financially inclusive screening process. Pinwheel’s API can pull income and employment data in just a few clicks with a UX that guides users through the process of finding their employer or payroll provider.

With a coverage of 80% of paid Americans, including gig economy workers, the Pinwheel API turns a once tedious (and often flawed) screening process into a smooth experience. We are continuously improving our data quality — the foundation of any risk assessment model — so proptechs can focus on creating better solutions for their customers.