How to find a new, RELIABLE online payment service?

76 Replies

For rental payments, I have been using erentpayment.com, but due to the issues that have just surfaced regarding fraud, I need to find another vendor. In short, for those who haven't been following the discussion, a link is here:

https://www.biggerpockets.com/forums/52/topics/499696-beware-of-fraud-by-erentpaymentcom

To summarize, tenants' payments made between a certain date range this month disappeared, although the company claims it's the fault of one of the processors THEY use.

I've read so many discussions about which online rental payment service to use, but how do we know this can't happen with another company? Does anyone have recommendations for a payment service you feel to be extremely safe and reliable?

I am going with Cozy. It is free and has a good reputation...as did eRentPayment. :-(

@Scott Weaner I was thinking about cozy.co too, but how do we know the same thing couldn't happen?

I bank with Bank of America and i used Zelle through the BOA app. it links up with all the major banks. You can text a payment request and they can pay it immediatley. Instantly in your account. No fee for either side of the transaction. 

I use cozy.co. Works great.

@Rachel N. , I have this exact same question. I use Cozy and love it, but could this same thing happen to them? Hopefully Lucas Hall will shed some light on this. What a great opportunity for Cozy.

This is a great opportunity for another vendor to take over all of eRent's customers.

Would be great if companies like @cozy @clearnow could jump on this thread and let us know if their process is different, or even educate us if what eRentPayment is saying is even true. I'm sure they understand the business model used and could better shed some light on this.

I picked erentpayment because of all the great reviews here, so I'm hesitant to switch now just based on reviews, but would like to hear from the companies themselves and what security they offer. Seems like eRentPayment was all smoke and mirrors.

After this fiasco I will probably collect checks for November, but I need to find a better alternative.

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Venmo all day. Tenants pay me on day one, and the money is in my account the next morning. None of the 3-5 day wait like cozy. Plus, most younger people already have it.

I use Cozy.co and am very happy with it

But I thank you @Justin Yung for your honesty and empathy at a time when you could just as easily make a sales pitch to win over customers. I am hopeful that your candid response will. Thank you

Originally posted by @Justin Yung :

Hi Bob, I'm Justin Yung and work at ClearNow.  We're generally not very active on posting to BiggerPockets, but wanted to reply to your post since our name came up.  

There's just simply not been enough clear communication from eRentPayment to fully understand what is happening.  Unfortunately, any comments at this point would just be speculation.  

When you've been in this business as long as ClearNow (we have landlords that have used us for 17 years) and have worked extremely hard to innovate and create a valuable service for landlords and property managers, its extremely disheartening to see the problems the eRentPayment customers are having.  We really hope those customers can recover their funds.            

  

 I've used ClearNow for the last two years. Good service and no complaints. 

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@Lucas Hall ,

Thanks for replying. 

You state that "neitherCozy nor Stripe ever takes custody of your funds. Instead, we simply instruct the money to go from the renter’s bank account directly to the landlord"

I always assumed you made your money by holding the funds and earning interest which is why a five day delay from when funds are taken from the tenant until deposited in my account made sense. If the funds are just transferred from the tenant's bank to my bank why is there a five day delay? Where is the money in the meantime?

Originally posted by @Eric M. :

@Lucas Hall,

Thanks for replying. 

You state that "neitherCozy nor Stripe ever takes custody of your funds. Instead, we simply instruct the money to go from the renter’s bank account directly to the landlord"

I always assumed you made your money by holding the funds and earning interest which is why a five day delay from when funds are taken from the tenant until deposited in my account made sense. If the funds are just transferred from the tenant's bank to my bank why is there a five day delay? Where is the money in the meantime?

Hi Eric,

We initiate an ACH debit from your tenant’s account, and wait for their bank to confirm the payment was successful — this generally takes 3 business days. Then, we initiate a deposit of those funds to your bank. We never take possession of the funds, but rather just wait for them to clear your tenant’s account before we initiate a deposit. 

Medium cozy orangeLucas Hall, Cozy | http://cozy.co

Originally posted by @Eric M. :

@Lucas Hall ,

Thanks for replying. 

You state that "neitherCozy nor Stripe ever takes custody of your funds. Instead, we simply instruct the money to go from the renter’s bank account directly to the landlord"

I always assumed you made your money by holding the funds and earning interest which is why a five day delay from when funds are taken from the tenant until deposited in my account made sense. If the funds are just transferred from the tenant's bank to my bank why is there a five day delay? Where is the money in the meantime?

 I rely on electronic banking quite a bit.

I transfer funds to my daughter in college via electronic transfers and it normally takes 2 business days. If I set up the transfer on a Monday, it's deducted from my bank account on Monday, and she'll receive it on Wednesday.

But the way I see my service, Clearnow works, there's an intermediary step. The funds are received at an intermediary bank, fees deducted, and there's another 2 day trip from the ClearNow bank to my bank. So the trip from the customer bank to my bank takes a minimum of 4 business days. 

So if the renter has insufficient funds, I'm notified on the 3rd business day.

I was a programmer for a while and worked on programming ACH transactions, or "Automatic Clearing House" transactions. It's a system for bank to bank electronic transfer of funds. It was about 20 years ago, and I'm told back then these transactions takes 2 days to complete. As far as I know that system hasn't changed.

ClearNow does it in 4 days. If it takes 2 separate ACH transactions to get the funds from the renter's bank to the landlord's bank, 4 days would be the bare minimum. If it takes 5 days, it's one day beyond minimum, which they need for processing.

Disclosure: I am the Founder/CEO of Cozy.

This was a tough day for many landlords, and we understand your fears, concerns, and frustrations. Thank you for asking about our methods. Let me share why we believe landlords and renters using Cozy will not experience a similar result to the recent event.

First, and perhaps most importantly, we work with Stripe for payment processing. Stripe operates in 25 countries, and they’re a company clearly set up for the long term. Stripe is a $9 Billion company and is widely regarded as a trusted payment processor. Stripe handles payments for tons of awesome companies, including, coincidentally, BiggerPockets.

While we have many internal safeguards that I’ll talk about in a second, understand that Cozy never takes custody of your funds during a payment transaction. Our processing partner Stripe is a licensed money transmitter, and moves your money on our behalf. Funds travel from renters’ bank accounts and credit cards and are deposited in landlords’ bank accounts via the ACH system. Cozy has no access to your money while it’s in transit.

eRentPayment in a recent statement said the following:

“We regret to inform you that our payment processor, eCheckit, has informed us that it expects to file for bankruptcy protection shortly. We are told that it suffered losses due to a fraud and that its processor, Check Commerce, has held over $4 million of its funds and will not release the funds to the intended recipients at this time.”

We believe it to be extremely unlikely that Stripe will experience an issue like this. Their underpinnings sit on Wells Fargo, which is the fourth largest bank in the United States.

Of course, this is not the only issue that may affect your security when processing rent payments, so we have additional buffers in place to add additional security:

1) Our Trust & Safety team ensures that every single Cozy payment goes through several layers of fraud detection. These include internal proprietary software, external partners such as Sift Science, and humans at Cozy.

2) We employ an extremely rigorous software development process. Every code change is backed with automated tests and reviewed by at least two engineers. Cozy has to work reliably. We understand how costly bugs can be, like when Knight Capital lost $441 million in 45 minutes.

3) We keep our infrastructure up to date, which ensures that we receive security updates as soon as possible. The recent Equifax breach was a result of a security update that took months to apply. Similar updates to Cozy’s environment are applied in days, or even the same day, for critical vulnerabilities.

4) We actively and voluntarily pursue data security. Cozy is voluntarily compliant with PCI DSS, even though we do not store your credit card information. (It’s in Stripe, so why also store it on Cozy?) PCI DSS is one of the most stringent organizational security standards in financial technology. We hire third-party security specialists to perform yearly audits. For example, the leak of credit card information at Home Depot in 2014 was due to insufficient PCI DSS compliance.

I have been using Zelle but only for the last few months.  It is free, works well, and the money is in my account instantly.  There isn't even a delay until the next day.  I'm not sure how it is done but it works well and I did not even need to give any of my information out to a tenant to do it. 

One option I don't see mentioned a lot, but in doing some research is Quickbooks Online, for $15 a month you can send invoices to your tenants and have them pay via ACH. They also said I can setup recurring payments. I feel like with Intuit, there must come a bit more safety.

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Questions for those who use Zelle....is it all automatized to send sned reminders, draft $$ etc, or do you have to send a request each month etc etc?

@Ned Jackson - I've only used it a few months and my tenants just initiate it each month by sending me their payment.  I don't send reminders as they should know their rent is due.  All they need from me to make it work is my phone number.  I have my account linked to the site using my debit card and I'm assuming they pay the same way. 

I get a text when they send it and it is in my account immediately.  If I get the text, I can look at my account and it is already there. 

I think the functionality depends on who you bank through.  I use a smaller credit union that works with zelle but is not actually connected with zelle.  Functionality is probably better with connected banks like wells fargo or some of the larger banks.

@James Woodrich I see that my bank would restrict the total amount per day being sent depending on the account tier. ($2000 or $5000) and apparently each bank can set their own limit. This has the potential to jam up a landlord who has an apartment in the higher range. I am curious what the other bank limits are.

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I've been using cozy.co to collect rents, and are very happy about it for now.