PAD vs Credit Card for Strata Fee Collection: The Real Costs
Why pre-authorized debit beats cards for recurring fees — and where cards still fit.
6 min read
The recurring-payment problem
Strata and condo fees are the most predictable payment a building collects — same owners, same amounts, same day every month — and yet collection is where managers lose the most time. The reason is usually the payment method: cheques that arrive late, e-transfers that have to be matched by hand, and cards that quietly skim a percentage off every dollar. The method you default owners onto largely decides how much of that friction you inherit.
How pre-authorized debit (PAD) works
Pre-authorized debit pulls the fee directly from an owner’s bank account on a schedule the owner authorizes once. After setup, collection is automatic: no monthly reminder, no manual matching, no card expiry to chase. Because PAD moves money bank-to-bank rather than over the card networks, the per-transaction cost is a small flat fee rather than a percentage — which is what makes it the natural fit for a fixed recurring charge.
The cost difference over a year
The gap compounds. A credit card typically costs a percentage of each payment, so a larger fee costs proportionally more to collect, every single month. Pre-authorized debit’s flat per-transaction cost doesn’t move with the fee amount, so as monthly fees rise the percentage a card skims grows while PAD’s cost stays flat. Across a full year and a whole building, the difference between a percentage of every fee and a small flat debit is the difference between a rounding error and a line item the treasurer notices.
Where credit cards still make sense
Cards are not the enemy — they are the wrong default for a fixed recurring charge, but the right option for one-off or optional payments where convenience matters more than cost: an amenity booking fee, a move-in fee, a one-time special assessment an owner wants to put on a card for their own reasons. Offering cards for those while defaulting recurring fees to PAD gives owners flexibility without making the building pay a percentage on its most predictable revenue.
Arrears: the part cards don’t solve
No payment method collects from an owner who isn’t paying, and this is where collection becomes real work. What actually moves arrears is the system around the payment: automatic aging so overdue balances surface early, jurisdiction-capped late fees applied consistently, and payment plans that let an owner in hardship catch up on a schedule everyone can see. A card processor gives you none of that; a collection system built for strata fees gives you all of it, with PAD as the rail underneath.
What to set up first
If you’re starting from cheques and e-transfers, the highest-leverage first move is getting owners onto pre-authorized debit for the recurring fee and turning on arrears aging so nothing slips quietly overdue. Add owner statements so every owner can see their own balance and history without emailing the manager, and reserve cards for the occasional one-off. That sequence removes the most manual work for the least change to how owners already think about paying.
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