The best rent payment app should simplify the rental process for tenants and landlords. And you may think that Venmo is ideal for paying rent online. Tenants can pay rent with a debit card or bank balance for free. And landlords receive payments from tenants instantly. So, using Venmo to pay rent seems like the perfect solution on the face of it.
Although paying rent with Venmo seems ideal for tenants, what about landlords? Does Venmo check all the boxes as being the best rent payment app? What are the compelling reasons to look for alternatives to Venmo for rent payments?
This article looks at why Venmo could negatively impact your rental income, cash flow, and ability to evict a bad tenant quickly.
Why Use Venmo For Rent Payments
Paying rent online is the most common reason to use Venmo for rent.
Most landlords avoid accepting rent in cash because it’s not secure a payment method. Cash can be lost or stolen, which would affect your rental income. Additionally, a rental cash payment has no paper or digital paper trail and increases the risk of disputes.
Using Venmo for rent payments also avoids sending a rent check. Although paying rent by check is still popular among tenants and landlords, more and more renters want to pay rent using a digital payment app. Therefore, Venmo eliminates the need to process paper checks.
How to Use Venmo Balance to Pay Rent
Using Venmo balance to pay rent is generally straightforward for tenants. Money in the account balance consists of unspent money tenants have received from friends or not transferred to their bank account. Venmo also offers a credit card as an alternative payment method.
The first step for tenants to use Venmo balance to pay rent is to verify their identity. This gives them access to their balance to send money to friends or pay bills. However, it’s only possible to use the Venmo balance for rent payments if the money in the account covers the total amount of rent.
But, just because it’s relatively easy to use Venmo balance to pay rent on time doesn’t mean it’s the best rent collection solution.
Features of the Best Rent Payment Apps
A suitable rental payment app should allow tenants to make rental payments on time and have rent collection tools for landlords. In addition, the best online rent payment service should have features like recurring payments, rent reporting to credit bureaus, an option to block a partial payment, and split rent for roommates.
Let’s look briefly at these features:
- Recurring rent payments: Setting up automatic rent payments simplifies the rental process for tenants. This also minimizes late rent payments and having to charge late fees.
- Partial payment blocking: The option to block partial rent payments is crucial if you are trying to evict a delinquent tenant for a lease violation.
- Rent reporting to credit bureaus: The best rent payment apps should report rent to credit bureaus. This excellent feature encourages on-time rent payments. Additionally, including rent payment history in a credit report helps tenants build a healthy credit profile.
- Split rent with co-tenants: If you have multiple tenants in a rental unit, using a rental payment app to split the rent is the perfect solution.
- Automatic late fee calculation: Inevitably, a tenant will occasionally be late with the monthly rent payment. So, an app for rent payment should charge the appropriate amount of late fees in the next rent payment.
- Automatic rent reminders: A dedicated rent payment app allows you to send friendly reminders before rent is due automatically. This convenient service helps to prevent late and missed rent payments.
Do you use Venmo as a rent payment app? Are you a landlord or rental property owner who uses Venmo for rent payments? And how does Venmo stack up when comparing the features of the best online rent payment tools?
7 Reasons to Avoid Venmo For Rent Payments
The primary reason to use an alternative to Venmo is that it lacks features found in online rent payments apps. So even though it’s a convenient money transfer app for sending money to family and friends, it’s not a great solution if you want to run a successful rental business. Here are seven reasons why.
1. Landlords can’t decline a Venmo payment
Venmo makes it impossible to stop a partial rent payment because it lacks payment controls. The need to decline a Venmo payment arises during an eviction process. When trying to evict someone, it’s crucial to block rent payments for less than the total amount.
Here’s a scenario when using Venmo for a rental business becomes problematic.
Suppose you must evict a tenant for a lease violation like non-payment of rent. In that case, you can’t accept a partial payment. But if you were using Venmo, you don’t have the option to decline or cancel a payment. So even if the tenant made a Venmo payment of $1, you must start eviction proceedings again.
2. Venmo doesn’t report rent payments to credit bureaus
Venmo doesn’t include rent reporting to the major credit bureaus. While this may seem insignificant, it could negatively impact your rental business. Tenants want rental history included in credit reports to improve their scores. Without offering this service, your company could suffer. How so?
Research by TransUnion found that nearly 70 percent of renters would choose a to rent unit based on rental payment reporting. The reason is that rent payment history can positively impact a credit score. The same study found that 73 percent of tenants would be more likely to make on-time rent payments if landlords reported rental payments to credit bureaus.
So the option to report rent to credit bureaus is a win-win situation for tenant and landlord.
3. Landlords must pay Venmo fees to accept rent payments
Venmo is not a free rent collection app. Landlords incur high transaction fees for using Venmo for running a business. Depending on the number of rental units, these fees for business transactions could amount to hundreds of dollars a year.
How much are Venmo fees when using the app for business payments? Business users must pay a 1.9% + $0.10 fee per transaction. Additionally, a landlord must pay additional fees if the tenant pays rent by credit card.
4. No option to split rent with roommates
Although Venmo is popular with consumers for splitting bills, it’s not ideal for splitting rent between roommates. To split rent with Venmo, co-tenants would have to transfer their share to one person in the rental unit. They would then make the rent payment.
However, when using a mobile rent payment app, each roommate pays their share of rent directly to the landlord. This system ensures that each tenant on the lease is responsible for their share of the rent.
5. Tenants can’t set up recurring rent payments
Venmo doesn’t allow recurring payments, making it complicated to pay rent. Automatic payments allow tenants to enter details once and then forget about it. However, with Venmo, they must complete payment details every month. This problem is an issue with peer-to-peer mobile payment apps like PayPal, Zelle, and Cash App.
The best rent payment apps have recurring payments as standard. This streamlines the rental process for tenants. It also ensures on-time rent payments.
6. Venmo doesn’t automatically charge late fees
A vital feature lacking in Venmo is that it doesn’t calculate late payment fees. Without an online rental payment system, you must work out the appropriate fees to charge a tenant. However, a rental payment app takes into consideration rent controls, grace periods, and the number of days late. The fee is then automatically charged to the tenant.
7. No rent payment reminders to tenants
Venmo is a mobile app that facilitates fast money transfers. So, one of the features lacking for landlords is to send rent reminders. Most rent apps for landlords have a messaging feature to communicate directly with tenants. You can use this to send an automatic reminder email or SMS message. This is a practical way to minimize late payments.
Why Choose Rentdrop Instead of Venmo
Rentdrop is a fee-free, online rent payment system for landlords and tenants. It has the convenience of Venmo because tenants can make online rent payments for free. However, Rentdrop is packed with options to make paying and collecting rent online as smooth as possible.
Here are some reasons why Rentdrop is the best rent payment app compared to Venmo.
Rentdrop for tenants
Rentdrop — like Venmo — lets tenants pay rent with a debit card, credit card, or bank transfer. However, tenants can set up recurring rent payments, split rent with roommates, and get their rent payment history reported to credit bureaus (coming soon). Additionally, tenants don’t pay a fee for debit card payments or direct deposit payments.
Rentdrop for landlords
Rentdrop doesn’t charge landlords a subscription or transaction fee for rent payments. Unlike Venmo, Rentdrop has vital payment controls for landlords. These include:
- Block a partial payment
- Accept various online payment methods
- No processing fee for debit or credit card payments
- Payment status
- Payment notifications
- Access to payment receipts
- Fast payment processing
For example, it’s easy to block a partial payment during an eviction process. Also, the app automatically calculates late fees, sends payment reminders, and has payment receipts and reporting.
The Best Rental Payment App — Rentdrop vs. Venmo?
It’s clear that Venmo lacks the vital rent payment and collection features of Rentdrop. It ensures that it’s straightforward for tenants to pay rent and include rent payments in their credit history (coming soon). Rentdrop also has valuable benefits for landlords as it gives complete control over rent payments.
It’s easy to sign up for Rentdrop today and start collecting rent with an online payment rent system designed for landlords and tenants.