There are a number of ways that landlords can accept online rent payments from tenants. The most common method is to use a service such as Zelle or Venmo. These services allow landlords to set up an account and then add their tenants as users. Once the landlord has added the tenant, the tenant can then send money to the landlord through the service.
The pros of using those apps are that they are easy to set up and transfer occurs almost in real-time. However, those apps usually limit the amount you can transfer in a short period and for a landlord managing over 5 units, those limits tend to be insufficient. Also, the seemingly real-time transfer only happens between two accounts within the application. If the landlord were to withdraw their fund into an external bank account, it may take a few days and additional fees.
Another way that landlords can accept online rent payments is by using a credit card processing service such as Square or Stripe. These services allow landlords to set up an account and then add their credit card information. Once the landlord has added their credit card information, the tenant can then pay rent by entering their credit card information into the system. However, credit card transfer often comes with significant fees, usually around 2.9%, making this option less economic.
The last option, which is the most economic, is to use an ACH transfer. The ACH network is a network of financial institutions that allows for the transfer of funds between accounts. This method is similar to the credit card processing method in that landlords will need to set up an account with a service provider. The landlord will then provide their bank account information to the tenant, who can then initiate an ACH transfer from their own bank account. This option often has lower fees than credit card processing, making it a more economical choice.
In addition to conventional money transfer, some landlord also accepts bitcoin payment for rent. While it is not as common, it provides an additional method of payment for tenants who may prefer to use cryptocurrency. The reason for landlords to accept crypto payment is often beyond convenience, therefore, we won’t discuss more in detail here.
While accepting online payment makes receiving funds easier than getting a paper check in the mail, it does not automatically enforce the late fee if the payment were late. For all those options, tenants often select the amount to initiate, making it impossible to automatically enforce the lease late fee. This is where landlord software like PortfolioBay comes to the rescue. PortfolioBay offers ACH online transfer to collect rent, and automatically enforces late fees based on lease terms entered. This not only makes paying rent much easier, with just a few clicks of buttons, instead of having to manually enter the amount each time, but also encourages on-time payment over time.
Regardless of which online payment option you use, having an option for online rent payment not only makes rent collection easier but also makes it easier for tenants to make the payment, reducing the likelihood of late payment. If you are looking for an option to accept rent payments online, PortfolioBay is a great choice for independent landlords, who self-manage rental properties.