Credit card payment for rent?

15 Replies

Has anyone accepted cc payments for rent? Situation I have is my property manager is renting one of my places for 1450/month. Tenant pays using SQUARE- and they take approx 3%. Effectively then, I'm left with closer to 1400/month. That said, do you ask tenant to increase the amount by which they are being billed so that you get the full 1450 (that's what the lease is for) or settle w the lesser amount? Do I have a right to ask for the full 1450? Thanks all! P

We don't accept them but unless you say you accept them without fee I would discontinue the practice or ask them to pay the fee.

What does your lease say?  if it just says you accept them start passing on the fee.  Although you are in California and who knows what the law is there.

Thanks all for the quick responses. Am deliberating whether to continue this practice or not. I understand that it is not ideal... But, it's working for now (even though I'm taking a small percentage hit)- come to think of it though, I now understand why all cab drivers and small business owners get upset when I pay w cc for my small transactions.

I would question the property manager's other practices if they use square or other credit products for payment of rent. The chance for chargebacks is too high and you get to pay for the increased risk.

Although it has never come up, I have a Square account and would allow a tenant to pay their rent that way, but only if they were also willing to pay the fee.  NO WAY would I pay the fee, when they are the ones receiving an unusual convenience.

Quite frankly, the tenant might be paying rent with their credit card just for points/cash back.  Think about it.  They charge their rent to their credit card because there is no penalty to do that.  They get 1% back in points.  Then they just make a payment to their credit card for the amount of the rent and don't pay interest either.  While you are paying THREE percent of the rent amount.

Heck, if my bank allowed me to pay my mortgages with a credit card, I would do that exact same system.  But they don't...because they don't want to lose a percentage of my mortgage payment either.

We have in the past by setting up a merchant account, but you do get hit by those processing fees. I think it's legitimate to charge an additional fee for that, convenience stores used to do that all the time.

Originally posted by @Rick S. :

Hi Peter,

Each state is different in regards to whether you can pass a surcharge to the renter so be careful about that.  Here is a good reference for the state laws in regards to surcharges:

http://www.ncsl.org/research/financial-services-and-commerce/credit-or-debit-card-surcharges-statutes.aspx

 Thanks for this post. Apparently, in Florida it is a second degree misdemeanor to charge a surcharge. As if I need anything else on my rap sheet from college)))))

Originally posted by @Yuriy Tymoshenko :
Originally posted by @Rick S.:

Hi Peter,

Each state is different in regards to whether you can pass a surcharge to the renter so be careful about that.  Here is a good reference for the state laws in regards to surcharges:

http://www.ncsl.org/research/financial-services-and-commerce/credit-or-debit-card-surcharges-statutes.aspx

 Thanks for this post. Apparently, in Florida it is a second degree misdemeanor to charge a surcharge. As if I need anything else on my rap sheet from college)))))

 It's illegal in Calif too.  Your only options are

  • not to have a merchant account
  • to accept CC payments and eat the 3% fee as a cost of doing business

Add an expense account to your accounting system "Credit Card Fees" and post rents to Rental Income and a cost of 3% to "Credit Card Fees" and note payment type as Credit Card

Once it came down to paying by cc or not paying at all.  I wish I had a method to accept cc's at the time.  97% is WAY better than nothing!  

I'm glad you posted this @Peter Assaad .  I will add a sentence about it to my lease and address the surcharge in the rent methods section!

Originally posted by NA Beard:
Originally posted by @Yuriy Tymoshenko:
Originally posted by @Rick S.:

Hi Peter,

Each state is different in regards to whether you can pass a surcharge to the renter so be careful about that.  Here is a good reference for the state laws in regards to surcharges:

http://www.ncsl.org/research/financial-services-and-commerce/credit-or-debit-card-surcharges-statutes.aspx

 Thanks for this post. Apparently, in Florida it is a second degree misdemeanor to charge a surcharge. As if I need anything else on my rap sheet from college)))))

 It's illegal in Calif too.  Your only options are

  • not to have a merchant account
  • to accept CC payments and eat the 3% fee as a cost of doing business

Add an expense account to your accounting system "Credit Card Fees" and post rents to Rental Income and a cost of 3% to "Credit Card Fees" and note payment type as Credit Card

 The other option we have heard of is to offer a "discount" if paid by ACH/eCheck/Check to get around the surcharge term.  For example, rent is $1000 if paid by Credit or Debit Card and only $950 if paid by other means.  

Originally posted by @Rick S. :
Originally posted by @J Beard:
Originally posted by @Yuriy Tymoshenko:
Originally posted by @Rick S.:

Hi Peter,

Each state is different in regards to whether you can pass a surcharge to the renter so be careful about that.  Here is a good reference for the state laws in regards to surcharges:

http://www.ncsl.org/research/financial-services-and-commerce/credit-or-debit-card-surcharges-statutes.aspx

 Thanks for this post. Apparently, in Florida it is a second degree misdemeanor to charge a surcharge. As if I need anything else on my rap sheet from college)))))

 It's illegal in Calif too.  Your only options are

  • not to have a merchant account
  • to accept CC payments and eat the 3% fee as a cost of doing business

Add an expense account to your accounting system "Credit Card Fees" and post rents to Rental Income and a cost of 3% to "Credit Card Fees" and note payment type as Credit Card

 The other option we have heard of is to offer a "discount" if paid by ACH/eCheck/Check to get around the surcharge term.  For example, rent is $1000 if paid by Credit or Debit Card and only $950 if paid by other means.  

I just checked out that link.  Fortunately for me, I'm in a state where it doesn't matter.

But I'm rolling my eyes out how ridiculous it is for the states that "don't allow a surcharge for using a credit card"...but can give a "discount" for using cash.  Geez!!!  That's the same thing!  The only difference is in how it is stated. 

If I wanted to accept credit cards, why not raise rents? I do this with "late fees" and no longer have them:)

Example: I want to net out $1400 a month. My lease states the rent is $1475 and tenant may take a $75 deduction if postmarked by the 5th. I have found this to be a good incentive and in the event we end up in court there are no late fees to fight about:) You could do the same accounting for a potential CC charge and offer a deduction for payment via certified funds, etc.

There are so many cheaper options. Credit cards will be gone in ten years.

I own a merchant processing company so I think I could help you here.

You are well within Visa and Mastercard rules and regs for charging minimums and charging convenience fees if you choose. We even have credit card terminals that can automatically build in these fees at the time of sale.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here