Accepting deposit and rent payment via PayPal?

Question

Anyone in here receive payments from their tenants this way?

As I understand it, if they send it via the "friends and family" link (as in NOT "goods and services"), it's free

Is there a reason my tenants can't pay that way for free via the "friends and family" link on PayPal?  Is that somehow illegal?

Steve S. · Answer

Doing a little more research, it appears PayPal explicitly suggests paying rent for free is entirely acceptable.

Here's the link:

https://www.paypal.com/us/selfhelp/article/payment...

It states if you use your bank account, there's no fee.  Here's some verbiage from their site:

You're making a purchase if you're paying for:

• Services: to pay for a service someone provides, like a mechanic.
• Goods: to pay for goods other than ones you purchase on eBay.

There is no fee to send money for a purchase.

Friends and Family  You're making a personal payment if you're sending money for :

• A gift: to send money as a gift, like for a birthday.
• Payment owed: to pay your friend back for your share of a dinner bill, or for another item that your friend bought for you.
• Cash advance: payment not involving the purchase of goods or services. Your credit card provider may charge fees for a cash advance.
• Living expense: to pay for things like rent or utilities.
• Other: other payments that aren't a purchase of goods or services.

If you use your bank account or PayPal balance, there is no fee to  send money for a personal payment within the U.S. If you use your debit  or credit card, there is a small fee, but you decide whether you or your  recipient pays. If you send money outside of the U.S. additional fees  may apply.

If you have a balance in your PayPal account, we always use that  first. If you don't have a balance, we automatically use your bank  unless you change the payment method. You can change your backup payment  method at check out. Note: You can't add Payoneer accounts to your  PayPal account as a payment method.

We'll send the recipient an email to let them know that you sent them  money. If they don't have a PayPal account, we explain how to sign up  for one.

It does mention Venmo as a payment processor owned by PayPal that allows "social commentary" to be made and is popular with millennials.

What's odd is it took my renter's payment about 4 business days to process but he said he had both a credit card and a bank account linked.  I guess I'll have to call pay pal to find out what's up.

Jeff Gates · Answer

That paypal policy is for friends and family.  A landlord is neither.

Jessica Hawkins · Answer

@Steve S. thank you for that information!

Jeff B. · Answer

I recommend PopMoney to all my tenants.

Paul Ronto · Answer

The friends and family route can eventually get you into trouble since you are technically selling them a service. So be careful there, PayPal will eventually want their cut. There are some vendor protections with the goods and services side of paypal as well that you may want to protect you should the tenant decide to charge back, which on most CCs can be up to 180 days after a payment is made, so be careful, a sketchy tenant could recall their payments up to 6 months after making them if there's something they feel they were not receiving that they should have been. There are services that allow you to collect rent easily online for free that are much safer for landlords.

Johann Jells · Answer

Why not use Cozy.co, which is designed for this and free?  I would think Paypal would catch on after thousands of dollars to "friends and family" and reach into your account and grab their fees.

Alex Capozzolo · Answer

@Steve S. I know a few landlords who prefer Venmo as a form of payment. A bit more user friendly on mobile compared to PayPal.