{"id":142294,"date":"2022-04-05T13:18:44","date_gmt":"2022-04-05T19:18:44","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=142294"},"modified":"2023-03-18T13:46:51","modified_gmt":"2023-03-18T19:46:51","slug":"landlords-venmo-paypal-collect-rent","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/landlords-venmo-paypal-collect-rent","title":{"rendered":"Why Landlords Should Never Use Venmo or PayPal To Collect Rent"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm?e=BIGPOC1308470647&#038;light=false\" width=\"100%\"><\/iframe>  \n\n\n\n\n<p><span data-preserver-spaces=\"true\">Technological advancements impact the way we exchange goods and services. eCommerce has consistently driven the need for mobile wallets while helping to reduce the need for paper checks or cash.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Apps like Venmo and PayPal have upscaled the usability of mobile wallets by making peer-to-peer money transfers convenient and easy to use. As a result, they\u2019re an excellent fit for paying money to family and friends or paying bills online.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">But what about using Venmo or PayPal for collecting rent? Off face value, these digital wallets seem like a good idea because they get rid of rent checks and cash payments. After all, you want to collect your rent in full, on time, and without hassle. However, there are compelling reasons to avoid PayPal and Venmo to collect rent.&nbsp;<\/span><\/p>\n\n\n\n<p>Let&#8217;s go over why landlords should never use Venmo or PayPal to collect rent.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Using Venmo to collect rent<\/h2>\n\n\n\n<p><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/venmo-changes\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Venmo<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;is a digital wallet for making instant transfers. With Venmo, all your tenant needs to do is transfer the rent payment to your account, and it arrives instantly. In addition, the app allows the tenant to use their debit card, credit card, or bank balance.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Unfortunately, Venmo is not the best option for collecting rental payments. Not only is there no protection, but Venmo lacks essential features that many rent collection apps come with standard.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Let\u2019s look at the pros and cons of using Venmo for rent payments.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">The pros of using Venmo to collect rent<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Easy to use:<\/strong> <span data-preserver-spaces=\"true\">Once you download the Venmo app, you can start sending and receiving payments.&nbsp;<\/span><\/li>\n\n\n\n<li><strong>The money transfer is free: <\/strong>A tenant can make transfers from their Venmo account to your account for free.<\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Allows tenants to split rent:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;With Venmo, a tenant can split the rent between roommates. They can send an instant payment to the tenant responsible for paying the landlord.&nbsp;<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Venmo offers credit and debit card payments:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;The app provides credit and debit cards without charging annual fees. However, it can add 3% to the tenant\u2019s credit card rent payment.&nbsp;<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Social media features:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;Venmo incorporates popular social media features like comments, likes, and messages on payments. This switches up the user experience, enhancing the experience and allowing parties to communicate.&nbsp;<\/span><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">The cons of using Venmo to collect rent<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong><span data-preserver-spaces=\"true\">Charges fees for business transactions and \u201ccash a check\u201d features:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;Though person-to-person fees are free on Venmo, rent payments are categorized as a business transaction with a 1.9% processing fee plus $0.10. Also, if you use the \u201cCash a Check\u201d feature to deposit a check directly to your Venmo account, you will be charged 1% and a minimum of $5.<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Charges fees for instant payments:&nbsp;<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;There is a 1.5% fee (with a minimum fee of $0.25 and a maximum fee of $15) for instant transfers on Venmo.<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">No recurring payments option<\/span><\/strong><span data-preserver-spaces=\"true\">: Tenants can\u2019t set up automatic rental payments. Therefore, late rent payments become more likely, causing disrupted cash flow.&nbsp;<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Impossible to cancel a Venmo payment<\/span><\/strong><span data-preserver-spaces=\"true\">: Venmo\u2019s policies do not allow a refund to the renter or transfer to the landlord if a tenant pays the wrong amount due to incorrect details. The \u201cno cancellation policy\u201d makes it impossible to cancel a Venmo payment.<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">No automatic late fee calculations<\/span><\/strong><span data-preserver-spaces=\"true\">: Unlike rent payment apps, there is no way to charge late fees automatically. So, this means more paperwork and administration for you.&nbsp;<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Venmo&#8217;s dispute policies<\/span><\/strong><span data-preserver-spaces=\"true\">: Generally, Venmo won\u2019t get involved in payment disputes. However, if they do, the company will often favor the buyer (tenant) over the seller (landlord).<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Venmo can\u2019t block a partial payment<\/span><\/strong><span data-preserver-spaces=\"true\">. You can\u2019t decline or stop a rent payment made via Venmo. Nor can you block partial payments. The eviction process halts once the landlord accepts payment in some states, depending on the conditions of your situation. Therefore, you may find it difficult to evict a tenant.&nbsp;<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">No option for credit bureau reporting:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;With Venmo, you cannot report rent payments to credit bureaus, which affects the tenant\u2019s credit score. When credit reporting is out of the picture, there would be no means of incentivizing or penalizing late rent payments.<\/span><\/li>\n<\/ul>\n\n\n\n<p><span data-preserver-spaces=\"true\">It\u2019s easy to see how these cons outweigh the pros. No doubt, Venmo works perfectly for sending money to family and friends. It could even be helpful to split the rent between roommates. However, it is a bad idea for landlords to use it for rent collection. It offers neither protection nor incentive to you as a landlord.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">That said, is PayPal a better alternative for rent payments?&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Using PayPal to collect rent<\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Like Venmo, PayPal is generally great for making instant transfers. But is it suitable for landlords?<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">The pros of using PayPal to collect rent<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong><span data-preserver-spaces=\"true\">User friendly:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;The app is easy to use and provides robust security that helps to prevent fraud. It keeps your bank and credit card info safe by encrypting them.&nbsp;<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Offers multiple payment methods:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;Rent payments can be made with a debit card, a credit card, a bank account, or a PayPal balance.<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Business accounts:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;A PayPal business account helps you keep track of your invoices. It offers payment protection plans for accounting purposes. However, there is no protection for real estate transactions.&nbsp;<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">PayPal sending limits:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;With a verified PayPal account, there are only a few limits to how much you can send. PayPal sending limits offer an option of sending up to $60,000 in a single transaction. However, these can sometimes be limited to $10,000. Also, remember that rent payment goes to your PayPal account, not your bank.&nbsp;<\/span><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">The cons of using PayPal to collect rent<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong><span data-preserver-spaces=\"true\">Limited features for landlords:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;You can\u2019t apply and enforce late fees automatically; neither can you block payments. This makes it challenging to go through an eviction process successfully.<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">PayPal charges for rent payments:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;Although friends and family transactions are free on PayPal, business fees range from 1.9% to 3.5%, including a fixed rate of up to $0.49 commission. PayPal classifies rent as \u201cgoods and services,\u201d qualifying it as a commercial transaction. However, there is no payment protection for \u201creal estate transactions.\u201d<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Charges for instant transfers:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;PayPal charges 1% on instant access to your funds, while a free bank transfer will take a few days.&nbsp;<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Insufficient protection for landlords:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;When payment disputes arise, <a href=\"https:\/\/www.cbsnews.com\/losangeles\/news\/paypal-accused-of-favoring-buyers-in-class-action-lawsuit\/\" target=\"_blank\" rel=\"noreferrer noopener\">PayPal often takes sides with the payer<\/a>, in this case, the tenant. Just like Venmo, landlords are offered little to no protection.&nbsp;&nbsp;<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Inability to report payments to credit bureau reporting:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;PayPal\u2019s features do not include an option to report rent payments to credit bureaus. Late payments showing up on a credit report can motivate tenants to pay rent on time. With PayPal and Venmo, you miss out on this incentive.<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Rent reminders:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;PayPal doesn\u2019t send rent reminders before the due date. It only does when invoices are overdue.<\/span><\/li>\n<\/ul>\n\n\n\n<p><span data-preserver-spaces=\"true\">Overall, apps like PayPal and Venmo do nothing to serve your interests as a landlord. So, what should you do instead?&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Let\u2019s talk about property management apps and why they\u2019re a better alternative.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Why use property management apps?<\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Property management apps offer the best options for rent collection. Here are some of the benefits of property management apps:&nbsp;<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong><span data-preserver-spaces=\"true\">They\u2019re designed for rental management:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;Property management apps help you charge and track security deposits, late rents or utility fees, prorate rent, and send automatic reminders to tenants.&nbsp;<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Efficiency:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;Property management tools incorporate features such as leasing, applications, screening, and rent collection. In addition, some apps facilitate maintenance requests.&nbsp;<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Recordkeeping:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;Property management apps keep track of rent payments, making them visible to landlords and tenants. Some apps connect with accounting software and allow landlords to enter their revenues and expenses.<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Flexible payments:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;With property management apps, you can decline or block payments, split rent payments among tenants, set up recurring payments, prorate rent fees, and enforce late rents.&nbsp;<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Low charges for rent collection:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;Most property management apps don\u2019t charge fees for rent collection. If they do, they&#8217;re a lot lower than Venmo or PayPal.<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Credit bureau reporting:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;Some property management apps allow you to report your collections to credit bureaus.<\/span><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Closing thoughts<\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">The benefits offered by property management apps make a strong argument against using Venmo or PayPal for rent payments.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">PayPal and Venmo are not designed to serve your interests as a landlord. Instead, stick with the software built for you.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Property management apps will facilitate instant, prompt, and adequately documented transactions.<\/span><\/p>\n\n\n\n<p><em><span data-preserver-spaces=\"true\">What do you use to collect rent payments? Let us know in the comment section below!<\/span><\/em><\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_64dd51292c9f9\" class=\"visibility-group  hidden\">\n        \n\n<div id=\"hero-block_62df1a82bfc88\" class=\"first:mt-0 hero-block py-4    has-background has-slate-200-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-slate-800-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Ready to get your first property in 90 days?<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:16px\">When you&#8217;re a rookie, real estate investing can seem overwhelming. 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Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/signup\" x-on:click=\"window.analytics.track(&#039;Blog Block | Acquisition | Free Membership Signup&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/landlords-venmo-paypal-collect-rent&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n\n\n  <\/div>\n  ","protected":false},"excerpt":{"rendered":"<p>Technological advancements impact the way we exchange goods and services. eCommerce has consistently driven the need for mobile wallets while helping to reduce the need for paper checks or cash.&nbsp; [&hellip;]<\/p>\n","protected":false},"author":612767,"featured_media":142296,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5183,7119],"tags":[5843],"class_list":["post-142294","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-landlording","category-biggerpockets-daily","tag-rent-collection"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/142294","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/612767"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=142294"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/142294\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/142296"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=142294"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=142294"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=142294"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}