Toronto-based startup Chexy, which offers a rewards platform for renters, has launched its platform and raised $1.3 million CAD in pre-seed funding.
Crossbeam Ventures led the financing with participation from Groundbreak Ventures, Ferst Capital Partners, and angel investors in the real estate and FinTech spaces.
Founded by Lizaveta Akhvledziani (CEO), Abtine Monavvari (CPO), and Ben Gigone (CTO), Chexy calls itself a tenant-facing payments platform. It enables tenants to make their monthly rental payments through their credit cards and earn additional cash back through those credit cards.
“What if banks and merchants, already investing in loyalty and incentives, could help ‘pitch in’ to rent? That’s where Chexy was born.”
Through Chexy, tenants can collect rewards by spending with brands like Nike, Apple, and Sephora, allowing them to reduce their rental payments by redeeming their cash back.
“We thought, what if banks and merchants, already investing in loyalty and incentives, could help “pitch in” to rent? That’s where Chexy was born.” said Akhvledziani.
Chexy’s other features for tenants include rent splitting with roommates and automated payment processes.
Paying with credit cards rather than cash or debit can offer several advantages, like the ability to earn cash back and rewards. However, it could also put a financial strain on users who are struggling with consumer debt, as credit cards typically charge a high rate of interest to users who delay paying their balance. The average credit card interest rate in Canada is about 20 percent.
As interest and inflation rates increase, more Canadians are turning to credit cards. Canadian consumer debt hit an all-time high this year, reaching $2.32 trillion in the first quarter of 2023.
Chexy charges tenants $1 per month for paying their rent using their debit card. Meanwhile, credit card users are charged 1.75 percent of their monthly rent.
As of June 2023, the average rent for a one-bedroom apartment in Toronto is about $2,418. If the tenant paid rent through Chexy using their credit card, the fee would be an additional $42 per month. For some customers, this could be offset by the value of cash back and rewards offered by credit card companies.
Chexy is the latest FinTech firm to offer a rewards program specific to renters and landlords with the aim of expanding their payment methods.
In May 2018, RBC’s venture arm launched Get Digs, a digital service designed to assure landlords that they would receive their rental income each month, even if their tenant is late with their payment.
Through RBC’s Get Digs program, tenants could make their monthly rental payments using their credit cards, allowing them to earn reward points or cash back offered by their credit provider — the same basic concept as Chexy.
Tenants making their payments through Get Digs using a non-RBC credit card were charged a 1.5 percent fee. For example, for a one-bedroom with the same average $2,418 monthly rent, the tenant would be charged $36.27 a month from Get Digs to make that rental payment.
RBC shut down Get Digs in December 2020, providing no further details as to why it made this decision.
Another Canadian company that offers a similar service is Vancouver-headquartered RentMoola, which offers several methods for landlords to collect rent from tenants including credit cards, PayPal, and even a line of credit.
As Chexy grows, the startup said it aims to “strengthen the tenant-landlord relationship,” with plans to launch several new features for landlords, such as a dedicated dashboard and what it calls simplified rent collection and management.
Chexy is launching a credit-building offering this summer, designed to help tenants improve their credit scores by paying their rent on time.
According to Chexy, this funding round will help it grow its team and deliver its program to more renters across the country. The startup was previously part of the Antler incubator, receiving $150,000 as part of the program.
Featured image courtesy Unsplash.