The Complete Guide to Accepting Rental Payments Online
Decided to make the switch from checks to online rent payment? By the end of this guide you should be able to:
- Understand the basic process of getting set up to collect your rent online.
- Figure out which method is best for you.
- Open an account to start collecting rent.
- Collect your first rent payment digitally!
Table of Contents
- 1 Introduction
- 2 Is Getting Paid Online Better Then Getting a Check?
- 3 What are the benefits of using an online rent collection service?
- 4 Comparing the Different Ways to Accept Rent Payments Online
- 4.1 FAQ About Our Payment Service
One of the biggest pains in being a Landlord is collecting the rent. Whether “The check is in the mail” or consistently late tenants, what makes owning rental property so rewarding (the money), can often be the most difficult part of ongoing property management. That’s probably why it’s one of the most important parts of the job.
Over the past few years, more and more companies have entered the online rental payment space, targeting different markets and users. They use different technologies and different options, but the desired end result is the same: fast, effortless rent collection.Start Accepting Rent Online
Is Getting Paid Online Better Then Getting a Check?
In a word, yes. Having your tenants set up to pay online every month, is one of the best things to happen to Landlords and Property Managers. Keep in mind that most people (especially millennials), don’t even use checks anymore. So not only do they have to write you a check, they have to remember how to use a check in the first place!Start Accepting Rent Online
What are the benefits of using an online rent collection service?
When you switch from receiving checks to processing direct deposits, you make life a lot easier for both yourself and your tenant:
- It’s automatic! No more running after tenants to get paid. A tenant can either set up an automatic recurring monthly payment, or opt to receive an automated email every month when their rent is due.
- It’s fast! Most landlords will receive their money within 24 hours – that’s faster then a normal check can clear.
- It saves time! No more messing around with excel or quickbooks – your rental payment will automatically be entered into your online ledger.
Comparing the Different Ways to Accept Rent Payments Online
There are a few different methods that you can use to get paid online. Each has their own pluses and minuses, and we’ll discuss them here:
ACH/Online Direct Deposit
ACH stands for automated clearing house, and is what the banks use to handle transferring money to each other. If you’ve ever used direct deposit as an employer or employee, it’s basically the same system.
The primary benefits of ACH include:
- Same day and next day payment receipt.
- Difficult to dispute (which is good for Landlords).
- Can be automated.
- Very low costs, compared to credit cards or paypal. (Compare $2 a transaction vs 2-3% of a rental fee!)
This is the cheapest system to use, and is also the most secure. It’s also the one that powers our online system, which you can sign up for here.Start Accepting Rent Online
Accepting Credit Cards For Rent Payment: Good Idea or Bad for Business?
In theory, accepting credit cards seems like a good idea. Almost everyone has one, everyone knows how to use it, and you don’t have to worry if your tenant can’t afford the bill later on.
There are two main problems with credit cards for Landlords, which makes accepting them a bit of a risk, as well as expensive:
- Cost: Accepting credit cards can be very expensive. Transaction costs are usually 2-3% + 50 cents of a transaction, depending on which company you use. If your rental costs $700 a month, you could potentially lose up to $21.50 a month just on credit card fees. You could try and make your tenant pay for it, but most will fight with you. Compare that to a $2 fee for accepting direct deposit, which you can directly charge your tenant, and it makes direct deposit a clear winner.
- Chargebacks: The little spoken, but much bigger risk of credit cards, is chargebacks. This is when the credit card holder (in this case, your tenant), calls his bank and disputes the charge. The bank then takes the money back out of your account AND charges you a fee – anywhere between $25-75 every time. Now you have to fight with your bank to get that money back, and you often lose!
- Start Accepting Rent Online
When does it make sense to accept credit cards?
If you work with a lot of low income tenants, offering the option of credit cards can allow a third party (a well to do relative or friend) to pay the occasional payment on time. Additionally, if your tenants don’t have bank accounts, they may prefer to use prepaid bank cards that they can buy at places like CVS, Wallgreens or Krogers.Start Accepting Rent Online
Should I Use Paypal to Get Rent from Tenant?
Paypal has been around since the beginning, and is a well trusted name in the payment space. That being said, it’s important to understand the risks involved with taking any kind of money from paypal:
- Chargebacks again! PayPal can and will remove money (even if sent as a “check”) from your bank account, if it decides you are defrauding the person who sent you money. The burden of proof with PayPal lies solely on the Landlord, never on the tenant!
- Account Freezes: Do some Googling. Find out how many people have had a paypal account frozen! When you accept money with PayPal,it’s not your account!
- High Fees: PayPal charges very high fees to accept payments.
Demand Draft – Printing Out a Check for Your Tenant
Demand drafts are these little known method for accepting checks. Mostly used by telemarketers, the idea works like this: You receive permission from your tenant each month to print a check in their name, with their account information. It doesn’t need to be signed. There is special software that does this for you. Then, you take this to the bank and deposit it like a regular check.Start Accepting Rent Online
Paying at a Kiosk
Services like PayNearMe let’s the so-called “underbanked” (people who don’t have bank accounts, typically lower income), pay rent in cash at places like 7-11.
FAQ About Our Payment Service
Is it safe to pay and collect rent online?
Yes, our service is 100% safe and uses the same level of encryption and security that banks use, as well as companies like Amazon.com.
How much does it cost?
It currently costs $1.99 for each rental payment you accept.
How do I start collecting rent online?
Simple, click here to get started.Start Accepting Rent Online