How to find a new, RELIABLE online payment service?
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Founder/CEO · Portland, OR · Member since 2014 · 45 posts · 93 votes
8yDisclosure: 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.
76 Replies
- Minneapolis, MN · Member since 2017 · 353 posts · 223 votes8y
Originally posted by @Patrick M.:
@James W. 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.
I think it would just take discussions with the bank to resolve the matter. Once they know what the deposits are for and know the volume, I think they would approve a higher limit. It would be much easier for them to do that as opposed to processing rent checks for everyone.
I'm not exactly sure on my limit per day, but my rent payments don't always go in on the same day either and I only have a few properties at this time.
- Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes8y
@James W. I am more concerned with the limits that are set from the transmitting (tenants) bank. I believe there is no limit on receiving. But if you have a tenant in the $2k range (Which I hope to have in a couple months) it may be a problem because of their banks limit. My bank is fixed based on the level of your account and is not "adjustable."
- Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes8yPayment processing services should be required to have an insurance policy large enough to cover the kind of snafu that took place with E rent payment. I use cozy for all of my recollection. Cozy team, is your insurance policy large enough to cover one months worth of the rent collection you handle?
- Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes8y
@Max T. see my earlier post above.
Asking direct questions of the cozy team on this platform causes a bit of a bind on everyone. I would suggest shooting an email.
- Minneapolis, MN · Member since 2017 · 353 posts · 223 votes8y
Originally posted by @Patrick M.:
@James W. I am more concerned with the limits that are set from the transmitting (tenants) bank. I believe there is no limit on receiving. But if you have a tenant in the $2k range (Which I hope to have in a couple months) it may be a problem because of their banks limit. My bank is fixed based on the level of your account and is not "adjustable."
I have a tenant paying me $2,000 for one property. He banks through Wells Fargo and doesn't have an issue with it. It might depend on the institution through.
- Rental Property Investor · Nashville, TN · Member since 2015 · 102 posts · 129 votes8y
I use zelle for my personal money transactions. The potential problems I see for rent collection is a tenant can send any amount they want.
This is an opportune for other rent payment sites to advertise but it sounds like this can happen with any of them. Until these sites have insurance policies similar to FDIC I don't think landlords are completely safe.
Maybe it's time to go back to more traditional collecting methods. Now I understand why my tenants have used phrases like "I don't trust it" referring to payment sites. I have to admit they were correct.
- Flipper/Rehabber · Minneapolis, MN · Member since 2016 · 1k+ posts · 1k+ votes8y
To take a step back - why does everyone feel the need to let renters pay via electronic payment? Isn't that the tail wagging the dog???
I understand there is some convenience to have electronic payments but the moment I can't mobile deposit at my bank or the moment I feel it is too much of a hassle to deposit a check is the moment I know I don't have time for real estate! Plus - I can't imagine everyone is willing to "come to the times" and setup an electronic account so I will still have to deal with paper checks as it is.
Am I missing something here???
- Minneapolis, MN · Member since 2017 · 353 posts · 223 votes8yIt is easier for the money to just be in the bank. The old way is fine if you only have a few properties. Could you imagine having to cash 50 or 100 checks each month? It isn't like you would get them all on the same day to deposit at once either.
- Investor / Broker · Brooklyn, NY · Member since 2016 · 665 posts · 1k+ votes8y
I use Rentalutions and I collect around $60k a month.
The ERP mess got me pretty nervous.
I decided to ask Rentalutions about their processing and ask them if I can post it here to benefit the BP community.
Hopefully this helps.
Here is their response:
Hi Llew,
Thank you again for reaching out. As I mentioned previously, we were shocked and upset to hear about what happened to the landlords who used eRentPayment.com. You are 100% right in being concerned about this type of thing happening with your rent payments.
At Rentalutions, we take payment security very seriously. Before starting the company, both of our founders worked at large banks and have a deep understanding of how the financial system works.
When building our payments system, we evaluated working with a 3rd party vendor, like eRentPayment did (with eCheckit). This path would have been easier to build and would have lower ongoing expenses. What Ryan and Laurence didn’t like, though, was that we would be giving up control of our customers’ payments to a 3rd party.
Therefore, we built our own payment processing system from the ground up. We integrated with the largest business bank in Chicago - MB Financial, a bank with $20 billion in assets. When your tenants schedule rent payments, we automatically submit the payment instructions directly to MB Financial. There’s no intermediary like eCheckit. This is the biggest difference between eRentPayment and Rentalutions.
Beyond how our payments are structured, there are other security measures that we take to ensure security:
- all personally identifiable information and payment account information is automatically encrypted before it hits our servers using 256-bit encryption
- our servers are automatically monitored 24/7/365 to detect for vulnerabilities and automatically block suspicious traffic
Our security setup has been rigorously tested by several of our major partners including TransUnion and State Farm. Every time they’ve tested our system, we have passed on the first try.
There’s a lot of info here, but please let us know if you have any other questions.
Thank you,
Christine - Attorney · Miami, FL · Member since 2017 · 108 posts · 113 votes8y
If Zelle is the "preferred" platform for about 20 of the largest banks in the US and is incorporated into thier apps, then id say these other platforms of payment will be soon gone. The funds are instantly available and it is free. Of course, we will see how long the free part lasts.
- 8yChris K.Pro MemberInvestor · Baltimore, MD · Member since 2012 · 1k+ posts · 655 votes
Originally posted by @Shaun C.:
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.
Have you run into any issues with it? Can it be set up under a business or does it have to be under a name? I'm thinking about going this route but just want to switch to it and find out there are things I may have overlooked.
- 8yChris K.Pro MemberInvestor · Baltimore, MD · Member since 2012 · 1k+ posts · 655 votes
Also whats everyones opinion on just opening an account and letting tenants deposit it directly into the account? I'm not sure how I feel about them having my routing and account number but would probably set up an account strictly for them to deposit into then just move the money to another account. This is so frustrating ERP had been reliable for so long, never thought I'd be having to go thru this move again.
- Real Estate Investor · NY, NY · Member since 2017 · 18 posts · 21 votes8y
Originally posted by @Chris K.:
Also whats everyones opinion on just opening an account and letting tenants deposit it directly into the account? I'm not sure how I feel about them having my routing and account number but would probably set up an account strictly for them to deposit into then just move the money to another account. This is so frustrating ERP had been reliable for so long, never thought I'd be having to go thru this move again.
That was my previous strategy, but the problem is what happens when you need to evict and NOT accept payment. You have no choice but to close the account and create a different one they don't have access to. That was the good thing about eRentpayment, you could just cut them off from your unit, problem solved.
I'm leaning towards Cozy or QuickBooks online to accept payments.
- Investor · Bayside, NY · Member since 2017 · 1k+ posts · 1k+ votes8y
Originally posted by @Account Closed:
Originally posted by @John Woodrich:
To take a step back - why does everyone feel the need to let renters pay via electronic payment? Isn't that the tail wagging the dog???
I understand there is some convenience to have electronic payments but the moment I can't mobile deposit at my bank or the moment I feel it is too much of a hassle to deposit a check is the moment I know I don't have time for real estate! Plus - I can't imagine everyone is willing to "come to the times" and setup an electronic account so I will still have to deal with paper checks as it is.
Am I missing something here???
Right on. It isn't like no one ever gets hacked like, oh say Equifax, Yahoo, IRS, SEC, Instagram, Deloitte, Kaspersky, Verizon, Discus, T-Mobile, and on and on. All have been hacked.
The point is, the more digitial portals people use, the more likely they are to be hacked and that automatic deposit won't find its rightful owner - you. It will be hacked. It is just a matter of time. With a check payment (I always make a copy of each rental payment) I have proof to the bank that even though they might not show the payment, I have something to show, that they owe me money. With an auto-payment it's "he said-she said". A check can be canceled and a new one issued. Plus, I know that the check arrived -or- didn't. In a different thread, someone said they were owed 12 payments (electronic deposits) that they didn't realize were Not made. Turned out they could only collect on the last few because it had been too long on some of them. Sounds like an expensive way to do business to me.
I used electronic payments now and I'm pretty happy with it.
I done rentals for nearly 40 years, and one of my problems is I always had a few tenants that never ever sends a check out on the first of the month. It's always 3 or 5 days later, and when the check doesn't show up, tells us must be lost in the mail. When that happens, we say, don't bother, we'll pick it up. In one case, the tenants, 3 girls who's never around, we tell them to leave the checks in the mailbox, and we come by to pick it up. Once or twice we drive by and they forgot to put the check in the mailbox, and the rental is 40 minute drive away.
Back then, when we do pick it up, we have to bring it to the bank, and this we had to fit into our schedule. Sometimes, it's another week before it goes in.
Right now, I'm disabled by a stroke, so my wife drives me around. This pass winter, my wife was hospitalized after pesticide poisoning and out of commission for a few months. My sister in law had to help get groceries. We consider ourselves fortunate that rent payments are handled electronically so we don't have to make the run to the bank.
In fact, we had to sign up for "Fresh Direct" to have our food delivered, and sign up with "Uber" to get to the doctor. We thought of signing up with the bank to make remote deposits by iphone. However we're concerned with hacking so we're still thinking about it.
Right now, even though our tenants are on epayment, one of them had trouble paying the July rent, gave us three blank checks for it. We got his epayments for August, Sept and Oct. But he made 2 part payments for July with the checks he gave us, and he tells us that he should be able to pay the last 3rd by next Monday, but call him first.
We're thinking about it, if we didn't have this guy on epayments, every month would be like July. We don't require that of everyone, and I got the feeling when I took him on that this might happen. He drives a cab, and says things are slow certain times of the year. We're on ClearNow and the tenant gets an email several days ahead to tell them the money will be taken out on the first. We're not going through the eviction route now as my wife is still recovering, though she can drive.
I know about Venmo and Zelle, but the problem I see is the tenant still has to take action to make the payment. I still have to call and listen to excuses if they don't pay when I don't see the deposit.
- Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes8y
@Frank Chin sorry to hear of your unfortunate circumstances- but you did an excellent job illustrating the benefits.
@John Woodrich I used to spend the first part of the month traveling to my UPS box to collect rent that arrived sporadically. The envelopes would be mailed from 1 mile away and travel 60 miles to be routed back to me. As each day passed frustration would grow and then on the 5th I would have to make call(s) about late payments on checks mailed out 4 or more days ago.
Every month Cozy sends me an email when my tenants pay- that is really all I need. They all pay on or before the 1st. It eliminates the headache of waiting for me, the inconvenience of mailing it and the need to pay the UPS store $300 for a box.
If that was all I used Cozy for then perhaps I would switch to a direct pay service and run the risk of receiving partial payments etc. But Cozy has a great platform to advertise my apartments which posts to Realtor and Doorsteps.
They have application and Background/credit checking. They offer integrated rental insurance for tenants that seems very reasonable. They offer rent comparisons. And I just saw yesterday that they are offering free expense tracking- take a photo of a receipt and place it into a tax related category which can ultimately be downloaded by a tax preparer. Many of these services are absolutely FREE.
I do not use all of these services, but it demonstrates to me that they are serious about their commitment to the landlord customer and that they want to provide the best products available. They are innovators and if you look back through the history of these threads- they have taken to heart many of the concerns raised by people here and have integrated them into their platform.
- Louisville, KY · Member since 2015 · 166 posts · 83 votes8yI have had good luck with cozy. I don't have a lot of investments properties but they have been good with what I do have. Is there any legal actions against erentpayment for what has happened?
- Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes8y
Anyone who worries about hacking and the like: there is, and always has been, far more fraud with paper checks than there ever was with electronic methods. There is a reason that the few places that still accept paper checks in person run them electronically. When it comes to fraud and fraud potential, time is your enemy. Electronics are virtually instantaneous - you can see the Erentpayment issue is related to the lag.
All ACH has a lag for verification purposes. Erentpayment limited some of that lag by paying you ahead, ie once they had verification that the move was approved you would get your money. That apparently ran out on them.
Skyline Properties - Royal Oak, MI · Member since 2015 · 257 posts · 230 votes8y
Originally posted by @Chris K.:
Originally posted by @Shaun C.:
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.
Have you run into any issues with it? Can it be set up under a business or does it have to be under a name? I'm thinking about going this route but just want to switch to it and find out there are things I may have overlooked.
None at all. I get an email and an app notification as soon as my tenants pay, log in to transfer to my bank. The whole process takes about 30 seconds and the money is in my account the next day. Not sure why anyone would use Cozy and pay a fee to get their money that quick when they could just use Venmo for free. 99% of <30 year olds use this already, at least where I live.
- Royal Oak, MI · Member since 2015 · 257 posts · 230 votes8y
Originally posted by @Bob Alva:
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.
I can understand that though, but with the hacks of major corporations(Experian) and governments alike (our own), let's be real; nowhere is impenetrable. Why pay a fee when I can use another place that's just as secure for free? You're throwing away $180/yr.
- Real Estate Investor · NY, NY · Member since 2017 · 18 posts · 21 votes8y
Originally posted by @Shaun C.:
Originally posted by @Bob Alva:
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.
I can understand that though, but with the hacks of major corporations(Experian) and governments alike (our own), let's be real; nowhere is impenetrable. Why pay a fee when I can use another place that's just as secure for free? You're throwing away $180/yr.
I agree that any place can be hacked, but my concern is not that, but instead a reputable vendor that is less likely to declare bankruptcy. eRentpayment was NOT hacked, but instead they are a small shop, using perhaps a less than reputable vendor for the ACH transfers that declared bankruptcy and basically said "too bad".
My thinking is that with Intuit, they have bigger players and more of a reputation to worry about. If something goes wrong, I would expect Intuit to be more responsive, have better safeguards and a reputation they will want to protect. I just have a harder time believing Intuit would tell people to figure it out on their own, but I could see the smaller guys mentioned in this thread doing something like that.
- 8yTom GimerBusiness MemberDMV · Member since 2017 · 3k+ posts · 3k+ votes
It seems the eRentpayments.com business model relied upon at least 2 third parties to handle landlord funds. If anybody in that chain went belly up, LL rents were going to disappear.
I can't believe people are looking for another provider.
When Bernie Madoff got popped did people start scrambling to find another ponzi scheme? smh
Gimer Law516 Reviews - Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes8y
I should also add that another thing I like about cozy is if a tenant was to:
1. be short for the month (which can happen even to professionals in this ever increasing freelance economy);
2. want to utilize their cash elsewhere;
3. want to earn miles;
4. Easily build credit;
They can pay by credit card and it is still cheaper than the late fee I charge.
Additionally they can have there normal rent payment reported to the credit bureau. I see a whole lot of advantages and it is for free.
I am in a very fortunate position in that I don't need to have the funds instantly. Receiving them on the 5th or 6th of the month still puts me far ahead of where I was with paper. I love knowing that it was paid- I can handle receiving it later in the week.
- Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes8y
@Bob Alva Intuit and Cozy both use Stripe
- Real Estate Investor · NY, NY · Member since 2017 · 18 posts · 21 votes8y
Originally posted by @Patrick M.:
@Bob Alva Intuit and Cozy both use Stripe
Thanks for that Patrick, that is good to know. But if Stripe ran away with our cash, would Cozy protect us the way Intuit would? That is the thinking I'm using.
I got lucky that I didn't lose anything with erentpayment who I picked just based on a lot of praise from the forum. I've checked out Cozy and I really like the site, system and so far their responsiveness to questions.
- Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes8y
@Bob Alva I understand, but I don't know that Intuit is any more insulated because they do use Stripe. And to hear the explanation of how Stripe is utilized- I do not believe it is sitting in another account. There is the initiation- confirmation of funds- transfer of funds (stripe)- receipt of funds.
ERP utilized a company that utilized another company who physically held the funds. As many here noted- they were operating with a company that was far from sophisticated and had an extraordinarily dated myspace-space like webpage. Cozy and Intuit do not do business like that and Cozy has painstakingly explained how they are different. Also as @JD Martin noted (to paraphrase) If Stripe ***** the bed we have a lot more than missed rent to worry about.
What I like about Cozy vs. Intuit is that it is 100% Landlord/tenant oriented. I think Intuit played around with rent payments a couple years ago and the discontinued it. They are a great company but they have their hands in a lot of pots- Cozy is all in for us, and their landlord-centric innovations (see new expense tracking) is geared to us. And boy do they listen to us!
In the past people on this site raised the issue(s):
I can't see which tenant is making a deposit on my bank statement- "OK, we hear you, fixed, your tenants name now appears on the deposit line."
I am worried about a partial payment during eviction- "No, problem just shut off rent collection here."
They listen to us, they respond to us- you know why? Because we are the only game in town. If landlords decided to stop using Intuit they would shrug. If Intuit decided to force you to buy more of their products to continue using their service (think spark rent) and you decided not to- they would shrug (I even doubt that
https://www.biggerpockets.com/forums/92/topics/174403-sparkrent-from-intuit-discontinued )
I see it as
As we go- so goes Cozy
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