What are the pros and cons of having tenants pay rent digitally?
What service or services have you used or are thinking about using?
Personally I'm thinking about using Google Pay (no fee with just bank accounts) since it integrates well with email and you don't need to sign up for anything to send payments (at least that's what they advertise).
Most major management companies offer this anymore so it will eventually become unusual to not accept rent electronically, it is more convenient for everyone as long as all parties know what they're doing.
We were set up for electronic pay with our management software, it worked great when we were managing our properties. Now we use a PM and they only take electronic payments.
Pros: No running around collecting checks. No lost in mail checks or MO. Easy system to see what tenant posted payment. Small fees. Processed in 2 to 3 business days.
Cons: Don’t get to hold the money in my hands. :-)
I accept payment any way my tenants want to pay me. They're paying their rent? Awesome! Check, money order, cash, ACH, google, deposit-only debit card, whatever, get that rent to me and I'm happy.
For digital payments, I have used Cozy in the past, which is great. I use it for screenings, so tenants are familiar with it when they see it, and it automatically reminds them every month. Tenant pays fee. Appeals to tenants who are tech-savvy but not comfortable just shooting over the money on Venmo or whatever.
More recently I rented to friends-of-friends who are about my age, hippie millennials like me. They asked to use Google Pay and it works great too. I don't think my older tenants would be comfortable with it but I'm happy.
@Mark Abele There’s lots of different options for electronic rent payments. A couple of my favorites are Cozy and Zelle.
Some of the PROS include:
- Speed of the payment (Zelle is nearly instantaneous)
- Most are free (both Cozy and Zelle are free)
- Not having to pickup checks or deal with excuses about checks getting lost in the mail
- Not having to go to the bank/ATM to deposit checks or money orders
- Not having to worry about bounced (NSF) checks
- Payments can be automated so tenants and/or landlords don’t have to do anything after initially setting it up (the payment will just automatically transfer on the chosen day of the month each month)
On the other hand, some of the CONS include:
- Speed of the payment (This was also listed as a pro, but I wanted to point out that with some of the services - like Cozy - it can take a while for the landlord to receive the payment. It’s not a big deal for me, but if it matters to you then it’s something to be aware of. Though there is an option with Cozy to pay for express payments which deposit faster.)
- Cost (some services charge a nominal fee to process payments)
- Ease with which payments can be reversed/chargedback by the tenant with some services (I’ve heard that this is fairly easy to do with some services, like PayPal)
- Won’t work if your tenant doesn’t have a bank account
Ultimately, I think the pros outweigh the cons and that electronic rent payments are a significant convenience for both the landlord and the tenant.
As far as I'm concerned there isn't a single good reason to not accept payments digitally. The sole exception may be if you're renting to a tenant who is just so old (or otherwise culturally disconnected) that they don't use digital platforms, and getting them to do so would be more work than the benefit would be worth.
In my observation, hardly anybody under 30 uses checks anymore except where the government (or their old-fashioned landlord) requires them to. I've only ever accepted digital payments from my tenants but I know at least a few of them have previously paid rent via check, and had purchased and used their checkbook SOLELY for paying rent once a month. Which is totally crazy to ask of your tenants, I think.
The only con may be that lots of online rent payment platforms have crazy high fees (one of my tenants used to pay a $22 processing fee to his old apartment), but there are plenty of options that are free or otherwise affordable.
Right now I use Roof, which costs $2/transaction. Interestingly Roof gives you the option to use it free and require your tenants to pay the fee (although I pay it myself so my tenants can rent for free instead).