Rent Payment Methods Landlords Need to Accept
Landlords may not always have the right to determine what forms of rent payment they will accept, depending on the state laws and the terms of the lease. For example, in Texas, if there is no specific method of payment listed in the lease, the landlord cannot refuse to accept cash payments and must provide a written receipt. You should check the laws in your state and see which forms of rent payment you are legally obligated to accept, if any.
Collecting Rent Online
There are many sites and apps that allow tenants to transfer funds to a landlord. These include sites like Venmo, Paypal and Zelle, all of which require both parties to create an account or to download an app. Funds will then be transferred electronically between the accounts. Transfer times vary from instantly, when using Zelle, to 30 minutes to 1 business day, when using Paypal. Zelle does not currently charge any transfer fees, but you will incur a fee when using Venmo or Paypal for business transactions.
Pros and Cons of Collecting Rent Online
Pros of Using P2P Apps
There are some great advantages if you allow your tenants to pay rent using payment options like Venmo or Zelle.
Funds Transfer Quickly
These payment apps allow the funds to be deposited directly into your account. The tenant will enter your contact information and the amount they owe and the funds will transfer directly to you. Zelle will transfer the funds instantly if both users have an account, Venmo can take 30 minutes to process and Paypal can take 30 minutes to 1 business day to process the transaction.
Payment is Easy
It’s very simple for tenants to pay via PayPal, Venmo, or Zelle. Neither party has to head to the bank to withdraw or deposit funds. Neither party has to drive to another location to pay or collect rent. With the click of a button, money is quickly transferred from one party to the other.
There’s a Record
Some P2P services will show you a record of payments from an account holder. Although you should keep your own records, it can be helpful to have a digital trail of payments in case either you or your tenant needs to clarify a misunderstanding.
Cons of Using P2P Apps
There are some potential problems you should be aware of if you decide to accept rent payments through P2P apps.
Paying the Wrong Person
If your tenant doesn’t have the correct contact information for you, they might pay the wrong person and might not be able to get their money back. Typically, the tenant would have to contact the person the money was incorrectly sent to in an effort to try and get the money back.
Transaction Fees
Zelle does not charge any fees, but Venmo and Paypal charge small processing fees for business transactions. People try to get around this fee by not declaring it a business transaction, but you risk having your account closed if the company finds out.
Partial Payments Automatically Go Through
Partial payments will automatically go through on Venmo and Zelle. On PayPal, you can decide to not automatically accept payments. Since you cannot decline a payment, a tenant could send you any amount they want, and the funds are automatically transferred to you. If you are evicting a tenant for nonpayment, the eviction can be cured or stopped if you accept any payment amount from the tenant. Therefore, a tenant could theoretically pay you one dollar through Venmo and stop or delay the eviction process. Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!
