Accepting Credit Cards for rent

25 Replies

I have been considering credit cards as a payment option.

My BIG hesitation, is a tenant who pays, and then within 60 days "disputes" the charge to try and get out of paying the rent. This is a big problem for some types of business - people who charge and intend to get out of the payment later. And it becomes somewhat he says-she says trying to get your money. At least with cash, cleared check, good money order, you havee your money.

Thoughts?

Not sure how you would defend yourself with that. I assume step number 1 is to have a lease agreement.

I don't like taking credit cards at all.

1. Risk of charge back.
2. Fees associated with it.
3. If a tenant wants to pay with CC they probably don't manage their financial house well.
4. Have to deal with a merchant account.

I am a much bigger fan of ACH transfers (no charge backs, no fees) and having the tenant deposit directly at the branch. You have the same benefits as a landlord by doing things that way.

Originally posted by Steve L.:
I don't like taking credit cards at all.

1. Risk of charge back.
2. Fees associated with it.
3. If a tenant wants to pay with CC they probably don't manage their financial house well.
4. Have to deal with a merchant account.

I am a much bigger fan of ACH transfers (no charge backs, no fees) and having the tenant deposit directly at the branch. You have the same benefits as a landlord by doing things that way.

How do you set up ACH?

You need a direct deposit authorization form. You can use a generic form online. This includes their bank's routing and account number among other things.

Have them use the credit card to get a cash advance, and then you get paid in cash. The CC company isn't going to let them dispute a cash advance.

Their credit card company will always side with the card holder. We deal with it all the time in my retail store. Plus if the card hasnt been swiped thru a terminal or imprinted then you have nothing to stand on.

Originally posted by Steve Babiak:
Have them use the credit card to get a cash advance, and then you get paid in cash. The CC company isn't going to let them dispute a cash advance.

Interesting, but I think the fees can be pretty high. Perhaps more with a debit card...

Plus most banks will ding you for 2.75% in merchant fees when you accept the credit card. If your rent is $1600 per month that equates to $530 per year lost.

@Steve Babiak With cash advances, interest starts the day the money is taken form the account. I would not tell my tenant to do this every month.

If a tenant needs to use a card to pay for rent, that is already a sign of their finances not being in order. You simply want to get paid in full, without having to be any kind of "credit service". Sure, the fees start the day of the advance, but don't your late fees start the day they are late paying? The tenant pays for any transaction fees with the cash advance, not you, so that doesn't become your problem. It certainly shouldn't turn into an every month situation, but if it does, be glad you get paid on time and in full always. Remember that the CC company is happy to make their profits on the fees and interest, and that is the nature of their business model.

There are many good reasons for people to want to use credit cards for things - even rent, and even if they otherwise have plenty of cash flow.

Of course, that doesn't mean you have to accept them, for all above reasons.

The chargeback thing is particularly scary.

Originally posted by Michael D.:
There are many good reasons for people to want to use credit cards for things - even rent, and even if they otherwise have plenty of cash flow.

Of course, that doesn't mean you have to accept them, for all above reasons.

The chargeback thing is particularly scary.

We take a deposit from my customers when they purchase from my store and then we manually enter the credit card info (not swiping thru the machine) for the balance. We received a charge back request on the balance amount about 2 months after our involvement was over. We had signed delivery forms stating everything was acceptable. The charge back request was unique in that it did not have an actual complaint from the customer but just asked for documentation. I called Visa and spoke to a representative. She told me that this is a way some banks use to collect some of their lost $$ from dead beat card holders. The banks will do charge backs to the merchants that were on the card looking for transactions that were not swiped or imprinted. If they are just key punched in.....we automatically lose. The charge card game is always in favor of the bank and the card holder.

you are looking at this all wrong...

most of my tenants have money, but can't qualify for a loan. so what if they like to get air miles or points with their credit cards? i pay my taxes and pay extra fees just to get the Hilton Honors points. Does that make me a dead beat?

use paypal and yes, the tenant pays the 2.9% and $.30 per transaction. why would you have to pay it? it's for them since "they are getting the points/miles"

we just signed up with paypay (3 days ago) and you get your money in 2-3 days (transfered to your account). this way they dont mail anything out.

you still have a record if they paid and that would apply in court...cash would not.

i just dont know why everyone acts all scared about taking payments with CC.

I agree with @George P. .

We got the Square Up thingy to make it easier for my wife to charge for Spanish lessons. You can swipe a card or you can enter it manually for a slightly higher fee (which I would, of course, charge to the tenant).

Originally posted by George P.:

i just dont know why everyone acts all scared about taking payments with CC.

For good reason, if you follow the thread about chargebacks and have any real experience as a merchant.

Pyapal provides no protection if it comes from their credit card. And PayPal has their own dispute process that does not favor the merchant.

If one ignores reality, then yes, there is no reason to be scared.

Originally posted by Ken Latchers:

Originally posted by George P.:

i just dont know why everyone acts all scared about taking payments with CC.

If one ignores reality, then yes, there is no reason to be scared.

This made me laugh.

Originally posted by Ken Latchers:

Originally posted by George P.:

i just dont know why everyone acts all scared about taking payments with CC.

For good reason, if you follow the thread about chargebacks and have any real experience as a merchant.

Pyapal provides no protection if it comes from their credit card. And PayPal has their own dispute process that does not favor the merchant.

If one ignores reality, then yes, there is no reason to be scared.

you can't pass the "chargebacks" to your tenants? or they can't afford it even though they want to pay with a CC? maybe it's the type of tenants you allow to rent your properties.

Originally posted by George P.:
Originally posted by @Ken Latchers :

Originally posted by George P.:

i just dont know why everyone acts all scared about taking payments with CC.

For good reason, if you follow the thread about chargebacks and have any real experience as a merchant.

Pyapal provides no protection if it comes from their credit card. And PayPal has their own dispute process that does not favor the merchant.

If one ignores reality, then yes, there is no reason to be scared.

you can't pass the "chargebacks" to your tenants? or they can't afford it even though they want to pay with a CC? maybe it's the type of tenants you allow to rent your properties.

Ken Latchers is referring to the happenstance if someone disputes the charge after paying the rent.

I suppose there are a lot of things to be scared of. Tenants trash units and don't pay rent and 90 percent of the time you don't get your money back. So I guess Ken could also say that you are not in reality if you decide to be a landlord. Every benefit will come with some sort of risk. It's a matter of individual opinion whether the risk is worth it or not.

Most tenants if they are paying with a cc would be a great way to fast track their way to bankruptcy. It may work a couple times then the 18% interest catches up with them in months 3 or 4 and its all over.

Originally posted by Brian Hoyt:
Originally posted by George P.:
Originally posted by Ken Latchers:

Originally posted by George P.:

i just dont know why everyone acts all scared about taking payments with CC.

For good reason, if you follow the thread about chargebacks and have any real experience as a merchant.

Pyapal provides no protection if it comes from their credit card. And PayPal has their own dispute process that does not favor the merchant.

If one ignores reality, then yes, there is no reason to be scared.

you can't pass the "chargebacks" to your tenants? or they can't afford it even though they want to pay with a CC? maybe it's the type of tenants you allow to rent your properties.

Ken Latchers is referring to the happenstance if someone disputes the charge after paying the rent.

I suppose there are a lot of things to be scared of. Tenants trash units and don't pay rent and 90 percent of the time you don't get your money back. So I guess Ken could also say that you are not in reality if you decide to be a landlord. Every benefit will come with some sort of risk. It's a matter of individual opinion whether the risk is worth it or not.

brian, cheers to u. this made me laugh.

i guess i am on the "fast track to bankcupcy" since i pay my taxes and 99% of everything else with my AMEX. and wait, i dont even know what's the percentage that AMEX charges me each month.

Your not getting it, I pay everything with a cc too. Then pay off every month. Residents can have a hard time prioritizing where the money should go. If the option is there not to pay the cc bill and figure we will get next month and have fun this month. Next month comes and its well maybe we can get it next month.

Originally posted by George P.:
you can't pass the "chargebacks" to your tenants?

Don't you know what a chargeback is? If so, you would not be asking this question. That is like saying if your boat is leaking, drill some holes in the bottom to let the water out...

Originally posted by Ken Latchers:
I have been considering credit cards as a payment option.
My BIG hesitation, is a tenant who pays, and then within 60 days "disputes" the charge to try and get out of paying the rent. This is a big problem for some types of business - people who charge and intend to get out of the payment later. And it becomes somewhat he says-she says trying to get your money. At least with cash, cleared check, good money order, you havee your money.

Thoughts?

We're a PM Group based in NYC with about 600 units. We had a lot of people asking to use CC and finally gave in. We had the exact same worries about chargebacks and etc. Anyway- long story short if you use a 3rd party service it becomes difficult (almost impossible) for the tenant to dispute the chargeback. We use a 3rd party service called NovelPay and we only had disputes twice. They had our back every single time. Plus they're cheap- they charger like $90 a year. If you're interested hit me up and I'll give my account managers info- I don't think he would appreciate me blasting his info all over the internet! LOL

Question: We're currently using JD is anyone using AMSI? If so, how is it? ANd would you recommend it?

Alone for the fees I would not accept CCs. Close to 3% just takes too much out for no real benefit. And I think Visa and friends does not allow you to charge extra fees for CC payments. Although you can give a discount for cash (see gas stations).

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