Collecting rent with a credit card

21 Replies

Hi Newbie here!

I was curious as to whether any landlords (residential) accept credit cards as payment and any pitfalls they have had.

I understand that it isn't the same as cash but...

Thanks.

:mrgreen:

be cautious as chargebacks can be incredibly expensive as can merchant processing fees.

say for instance being charged 3%+ $0.25 per transaction:

rent: $1000
fees: $30.25

if you are only cashflowing $100 per door as it is, you have just given 30% away in fees to accept that payment. not good in my book! also, that is not including other fees (ie, statement fees, batch fees, terminal fees, etc) that may be associated with accepting cc's

Thanks Josh

We looked into it, and found it to be too expensive as well.

While the convenience is very attractive, I am just not sure it makes financial sense.

I've considered accepting paypal as a means for rent. A tenant can use their credit card with paypal. If I were to implement it, I would charge a premium back to the tenant to cover the paypal charges/fees, however.

What if these fees were lower? Would you use some kind of online service for the convenience?

If I worked with middle/upper class rentals again I would.

For the lower/middle income blue collar folks, I am not sure if they would utilize it.

What does everybody else think?

I have read that some managers/owners of multi unit properties will work with on line payments or cc's.

These are upscale properties with amenities like access to web and cable TV, pools, gyms, etc. They charge for each service use by the tenant. The entire property then reports "takings" to their mothership business via the internet connection to the company books.

There is no reason a SFH rental corp with only a few properties could not do the same. You would have to set your website up to provide and bill for the on line service convenience. Hey no stamps! And no chance of being late.

I would say you should mark up any cc charges as well.

Best
Diane Menke

Does anyone use bank account transfers for receiving payments?

Would you be interested in a program that did this if costs less than $10 per payment?

I've been thinking about creating a website for this for a long time, but I'm not sure the demand is there.

I work at a credit card processing company and just wanted to make it known that it is against Visa/MC rules and regulations to charge a customer an additional fee to pay via a credit card. Now this is not to say that you cannot up your prices across the board and give cash paying customers a discount. However if you are to charge an additonal fee to cover your processing charges that is a violation of the terms of service and your account could be terminated. Please feel free to PM me if you have any questions that you would like me to anwser about accepting credit cards.

I use bank of america for our credit card transactions for a vacation retal that I own. We pass the convenience fee on to the tenant and there is never a problem with them paying for the fee (we discount 50 per week for cash).
That being said chargebacks are a big headache when accepting credit card payments. The tenants tried to get a full refund for 3 weeks rental and If we had not kept perfect records we would have lost our money. The bank of america rep told us that 9 times out of 10 we would have lost the money and she was surprised that we we won. So please keep that in mind and remember the money is immediately taken out of your account until the matter is settled.

I have used credit card services in my other business and have found it heart breaking when after we get the money through the credit card transactions we have to pay the fees, and each week is like a few hundred dollars (a few thousand dollars total all year) and you're thinking wtf this is not worth it! Even in a business with 30 clients and 200k in revenue, it was not worth the 3 percent just for the convenience of them paying me online. When I go into quickbooks and see how much I have paid in credit card transaction fees it is so depressing. Nothing is better than a check.

One time, the credit card company claimed that some of the charges were fraudulent! They withheld the money. I called my clients and asked them to call them to clear it up. After they called them it took the company 3 days to give us our money! We called them every day and faxed them whatever they wanted, and it was so embarrassing when we couldn't pay our vendors the big check that we promised on that date. Horrible customer service! They just want your money!

Kevin, the illinois secretary of state charged me a processing fee just the other day. Not that I would argue with the machine.

Originally posted by Kevin Colwell:
I work at a credit card processing company and just wanted to make it known that it is against Visa/MC rules and regulations to charge a customer an additional fee to pay via a credit card. Now this is not to say that you cannot up your prices across the board and give cash paying customers a discount. However if you are to charge an additonal fee to cover your processing charges that is a violation of the terms of service and your account could be terminated. Please feel free to PM me if you have any questions that you would like me to anwser about accepting credit cards.


As a tenant, i'd be stoked to pay my rent online. I might balk at getting a fee for doing so, but it'd be more convenient in some cases, especially if money was tight/short term (paying the day of would be better than mailing a check and having it withdrawn days or a week later).

I see you CAN pay for taxes and other fees at the county treasurers office but they add the fees. WHY would anyone want to do THAT???

My josh what would your taxes cost before you paid them off???

I've heard that paying through a credit card is a bad idea, especially if you are trying to evict a tenant. I believe under the eviction rules that you cannot accept any payment or partial payment if you want to evict a tenant. So, if the tenant does make a partial payment to you then you cannot evict them. With a check, you can simply not deposit it.

Am I blowing smoke or is that valid advice?

I'm planning on buying multi-family property in the USA; in fact I'm in the USA right now, having a lot of fun learning about your property market.

I would like to accept rent payments via direct deposit to my bank account, whereby tenants just tell the bank to transfer the money directly to my account on the 28th of every month, or whatever date has been agreed, OR transfer manually using online banking.

In my native Australia, this is the only way that tenants can pay rent for most rental properties; cash and cheques - sorry, checks - simply aren't accepted. I much prefer this system because:

1) You're more likely to be paid on time.
2) You immediately know when a tenant is having cashflow difficulties, because there'll be a disruption to the payment schedule.
3) Records are created and kept by the banks for you; it's easy to know and prove who's paid and who hasn't.
4) The potential for fraud is largely eliminated.
5) Transaction costs are negligible; it's cheaper than paying staff to handle cash and checks, and there are no problems with returned checks.
6) Tenants generally prefer it, too, because it's so easy. You set it up once and forget about it, or you do it when you pay all your other bills online.

But I gather that this system is not the norm in the USA. Is this just because it's not accepted practise (ie people aren't in the habit of doing business this way), or because there are obstacles to doing things this way? Are there legal or logistical reasons why such a system couldn't work here in the USA?

That assumes the tenant has a bank account. That's not always the case.

I have a friend who's given her tenant a deposit only ATM card. The tenant just deposits the rent directly.

Originally posted by Kevin Colwell:
I work at a credit card processing company and just wanted to make it known that it is against Visa/MC rules and regulations to charge a customer an additional fee to pay via a credit card. Now this is not to say that you cannot up your prices across the board and give cash paying customers a discount. However if you are to charge an additonal fee to cover your processing charges that is a violation of the terms of service and your account could be terminated. Please feel free to PM me if you have any questions that you would like me to anwser about accepting credit cards.


People SAY this all the time but I would love to see it in writing because everyone does this. Most small businesses won't accept a credit card for less than 10 or 15 dollars.

The apartment complex I live in has instituted the ability to pay by credit card just recently. They charge a $15 fee if you choose to do this.

$0.25 + 3% seems like a very strange arrangement. Most businesses I know of pay more like $1 + 1.5 - 2 % of the transaction cost. So for small transactions they really get screwed.

For Fresh Meadows, if I put my $1400 rent on a visa, that would cost them about $22 assuming they pay $1 + 1.5%. Minus the $15 fee they pass on to me, that means it only costs them $7. Not having to deal with the paperwork of taking checks and getting your money immediately seems worthwhile for that. Also, this is a massive corporation that owns hundreds of multi-unit properties in queens so I would imagine they investigate the issue with their lawyers before implementing it. People like that don't breathe without consulting their lawyer or accountant (sometimes both!)

Paying 3% for a cc transaction is really getting screwed. If someone really offered you those numbers, seek an alternate provider with better rates. Especially since rent charges will all be large, paying a higher base charge (such as $1 instead of $0.25) will be in your best interest. Only really small businesses where the charges are very low can benefit from a higher percentage and lower base charge.

Originally posted by Jon Holdman:
I have a friend who's given her tenant a deposit only ATM card. The tenant just deposits the rent directly.

Good tip; thanks Jon. : )

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I have tenants pay me via Paypal which has worked great. I just don't let them fund the Paypal payment via credit card.

To Corey, check out this link for what is and isn't allowed on credit card fees:

http://www.creditcards.com/credit-card-news/merchants-who-violate-credit-card-terms-1275.php

Sounds to me like your apartment complex is in violation of card agreement though they may be able to stretch the definition of a "convenience fee".

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