Where does the money actually go in Trustless Payments?
When an agency principal hears that a "trustless" payments product moves money from tenant to owner without sitting in any trust account, the natural and reasonable question is: where does the money actually go?
It's worth answering directly, because the answer depends on which version of "trustless" the vendor has built and the differences are commercially significant.
So where does the money actually go?
This is the question agencies ask when they first hear how Kolmeo's direct-to-owner model works, and it deserves a precise answer rather than a marketing one.
The money moves through Australia's payment rails with allocation executed at each step. The tenant initiates a rent payment. Once the payment clears (the timing depends on the payment method used), the payment rail itself reads the allocation rules attached to the property and acts on them.
First, agency fees are identified and paid to the agency.
Next, any approved invoices attached to the property, most commonly tradespeople with completed and signed-off work orders, are identified and paid.
Finally, the remaining balance is disbursed to the owner's nominated bank account.
The entire sequence is automated, executed by the payment rail rather than by a human running a disbursement batch, and the funds are in motion throughout. They are not held in a Kolmeo account between steps. They are not held in any vendor-controlled account between steps. They are flowing through the payment rails with the allocation rules applied as they pass each step. With Paycode, Kolmeo's same-day payment method, the entire sequence completes within the same business day.
What no one holds, no one can take.
Where Kolmeo sits
Kolmeo's direct-to-owner architecture has been in market since 2019. More than 90% of our landlords or owners opt in for it when given the choice. The owner chooses their own bank to receive rent. The tenant chooses theirs to pay rent. Nothing in between rests anywhere.
For the small percentage of owner arrangements that need agency-operated trust accounting such as multi-owner structures, corporate landlords, state-specific requirements, landlords who prefer the familiar structure, Kolmeo offers integrated trust accounting alongside, and the architecture upstream of the trust account is the same as the direct-to-landlord model.
When a tenant pays in trust mode, the payment rail still identifies and pays the agency's fees first, then identifies and pays any approved invoices, exactly as it does in the direct-to-owner flow. The only step that changes is the final one: instead of routing the remaining balance straight to the owner's nominated bank, it routes the remaining balance into the agency's trust account, where the trust accountant authorises the final landlord disbursement.
The practical consequence is that the fund pool sitting in the trust account at any one moment is only the owner's portion, not the full rent because agency fees and approved invoices have already been paid out automatically by the rail. The window between trust receipt and landlord disbursement is also shorter, because the trust accountant only handles the final step rather than reconciling every transaction. The audit, bond, and regulatory protections that have always governed Australian trust accounting apply unchanged, including the state compensation fund protections. The agency runs the trust account at its own chosen bank.
Three questions to consider:
Most principals don't run the day-to-day evaluation of property management payments software. The people who report to you do. Here are three questions worth asking about your chosen vendor:
- In our current and proposed payments architecture, where is the pool of funds that could be targeted by misappropriation, social engineering, phishing, or cyber-attack; who owns and manages it; and what controls protect it?
- Between the moment a tenant pays and the moment the owner receives the funds, where does the money rest, for how long, and who has the authority to redirect it during that window?
- In the event that funds in our payments architecture are compromised by fraud, misappropriation, cyber attack, or vendor failure, what compensation pathways apply, and who underwrites them?
A closer look
If any of this is the kind of thinking you want from a software platform, Kolmeo is worth a closer look both for the payments architecture described here and for what we've built around it.
Kolmeo Sonata is the payments platform behind everything above. It's been refined over six years on real portfolios, and it underpins every disbursement, every trust transaction, and every direct-to-landlord/owner movement on the platform.
For agency principals, owners, and directors thinking carefully about the infrastructure their business sits on, we'd welcome the conversation.
*Kolmeo is a privately owned Australian property management platform built for large and fast-growing agencies. Kolmeo Sonata has supported direct-to-owner and integrated trust accounting payments since 2019. Talk to us about how the hybrid model would work for your portfolio.*
