Accepting credit card payments with my cell phone?

9 Replies

For those that don't know, a new company called square up allows you to take credit card payments using your cell phone and a card reading device that plugs into the headphone jack. There are no monthly fees and no application to fill out. You are only charged a small transaction fee for each swipe. You can also manually input the card number into your phone, but the transaction fee is a little higher.

When I set-up my account months ago, I attached it to my personal account because I did not have rental property at the time. I didn't really need the thing, but I thought it would be cool to use for those times when you're trying to split a bill at dinner with friends. Anyway, now that I'm in the rental business, I was wondering if I should offer my tennants the ability to pay their rent plus 3.5% (the maximum fee charged by the processor) with a major credit card. My biggest concern is that they'd use it to pay for the rent that they otherwise couldn't afford. I'd hate for it to bite me in the butt later down the road when their monthly credit card payments become unmanageable and they can no longer afford rent.

What do you guys think?

Hmmm sounds interesting but I doubt people would be giving their credit card info to someone with this device. It just sounds like scams could start developing with this device as you'll probably get people to abuse it.

That's JMO.

That crossed my mind, but I think a tennant would have already put some trust into the landlord. I mean we have all their info and get a check every month with an account number. Now, a total stranger, yeah, I could definitely see that.

Indeed your tenants may want to pay rent (that they don't have) with a credit card. I've had someone try to do that via PayPal but I told them I wasn't going to pay the processing fee.

A couple things if you are going to accept credit cards for payment. First, you cannot charge the credit card fee to your tenant - it's not legal. However, you could set the rent at the higher rate and discount for payment by check. Second, if you accept credit cards, be prepared to deal with all of the protections afforded a credit card customer. You may end up dealing with things such as chargebacks which will result in you chasing money that you shouldn't have to. I'd rather know definitively that I have my rent, without fees, and once paid the tenant can't file a claim to cancel the payment.

Shane, I'm leery of accepting credit cards at all. It is my understanding that if you, as the landlord, accept a payment, even a partial payment, it is interpreted as an agreement for you to take less than the full amount owed for that month. The tenant still owes you the full amount which would be made up the next month or from the security deposit at the end of the term. With that said, you could not evict that tenant for non-payment until the next month.

I don't think it would take the tenant long to realize that he can challenge the last 2-3 payments when he moves out.

I've seen my applicant's credit reports. They buy a lot of stuff they can't afford and charge. The majority of them see no reason to pay the credit card company.

However, thanks for the info about the device. I intend to do some selling at the Farmer's Market and it would really be good to be able to accept credit cards.

Thanks guys. You all make good points. Sounds like it may not be worth the potential pitfalls that could come with it.

I can see places like farmers markets and even the Girl Scouts using this where normally they could only accept cash or checks but for the average joe nah.

Unless you have a reputable business this device would be useless as people would freak if they saw someone slide their credit card on their iphone lol.

Allowing your tenant to pay rent on credit also is likely to give you headaches done the road. Many people have trouble saving.

Say a tenant could charge there 800/mo rent and put it on a card. They make there minimum payments to the credit card company. Instead of say paying you 800/mo they quite likely will be paying 60 or 80/month. There would be a strong temptation to purchase other things with the money they are not currently spending. Eventually the credit card limit comes into play.

I dont even want to know what goes down when you put a stolen credit card through, and all the tricks they can play.

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