Collecting rent from tenants on time is the biggest pain point of any landlord. So, choosing the best method to collect rent is a crucial choice. The payment process you choose should be easy for tenants to pay rent by having options to split rent and set up automatic rent payments. If you’re a landlord or rental property owner, you need a rent payment app to simplify your rental business while reducing overheads.
Popular digital platforms for rent payments are Venmo, Zelle, and PayPal. Tenants like using these peer-to-peer payment apps because they are convenient. And paying the rent with a digital wallet is more manageable than sending a paper check. But are these payment methods good for your landlord business? What are the costs of using Zelle, Venmo, and PayPal for rent payments?
This article compares three popular online payment solutions with a dedicated rent collection app — Rentdrop. At the end of the article, you can decide which is best for collecting rental payments.
Digital Payment Apps for Rent Payments
Tenants are ditching cash and checks in favor of digital payment apps. To pay someone with PayPal, Venmo, or Zelle, the tenant must enter the mobile number, email address, or user name. Then the instant money transfer takes place, and the funds arrive in the recipient’s account.
Digital payment apps are an easy way to send rent money and a great alternative to sending a paper check. However, there are several reasons to seek alternative options to collect rent from tenants online.
Rent Payment Apps for Rent Collection
Rent payment apps like Rentdrop have the convenience of peer-to-peer apps like Venmo, Zelle, and PayPal. However, a dedicated rent collection app has several valuable features specifically for landlords. For example, tenants can easily set up automatic payments. In addition, landlords can block a partial rent payment and send rent reminders.
Collecting Rent with Venmo
Venmo allows tenants to pay rent instantly by entering the landlord’s username, phone number, or email. To pay rent with Venmo, all the renter does is tap “Pay and Request” to start the transaction. However, landlords must pay Venmo business fees when collecting rent because it’s “goods and services.”
How much does Venmo cost to collect rent?
Landlords must pay a transaction fee to use Venmo for rent collection. According to Venmo, their fees are 1.9%+$0.10 of the payment. This means that Venmo can become expensive to collect rent payments — costing hundreds of dollars a year. These fees can’t be transferred to the tenant unless you increase their rent.
Rent payments and Venmo limits
Venmo limits rent payments to $299.00 for tenants who haven’t confirmed their identity. After that, there is a weekly rolling limit of $4,999.99 for verified users.
How to cancel a Venmo payment?
It is impossible to cancel a Venmo payment once the tenant authorizes it. This fact makes it easy for tenants to pay the wrong person. According to Venmo, the only way the tenant can reverse the payment is to contact the recipient directly. However, there is no guarantee that the person will do this.
How to decline a Venmo payment
Landlords can’t block or decline a Venmo payment, making it unsuitable for rent collection. This means that you can’t block partial payments, making it difficult to evict a tenant. For example, suppose you start an eviction process for a lease violation. The tenant can stop the process by sending you a few dollars in rent.
This is one of the biggest issues landlords have with digital payment apps for rent. Therefore, Venmo could put your business at risk and severely impact your cash flow if you can’t evict a delinquent tenant.
Using Venmo for rent payments
Venmo makes it easy for tenants to pay rent. However, its lack of payment protection, safeguards for landlords, and inability to block a partial payment makes it a bad idea for landlords. Venmo is also an expensive option for rent collection.
Related reading: Reasons why Venmo is a terrible idea for rent payments.
Collecting Rent with Zelle
Tenants pay rent with Zelle by instantly transferring rent money between bank accounts. Because this is a bank-to-bank transfer, your bank account must support Zelle payments. Unfortunately, not all bank institutions support Zelle for small businesses, and it may be impossible for tenants to pay rent using a debit card or credit card.
Most major banks in the US integrate Zelle into their mobile banking app.
How much does Zelle cost to collect rent?
Zelle fees for landlords depend on the transaction fees their bank charges. Business transactions with Zelle typically have a maximum transfer limit and transaction fees. To find out about Zelle fees, you should contact your bank.
Rent payments and Zelle limits
Making rent payments with Zelle is relatively easy, and usually, Zelle monthly limits allow for most rent transactions. Here are a few examples. The Bank of America has a Zelle limit of $2,500 per day and $20,000 per month. Citizens Bank limits monthly transfers to $5,000.
Unfortunately, depending on how often tenants use Zelle for bank transfers, they may not be able to pay rent at the end of the month. For example, Wells Fargo limits monthly transfers with Zelle to $4,000.
How to cancel a Zelle payment?
Tenants can’t cancel a Zelle rent payment if the recipient (i.e., landlord) also uses Zelle. The money transfer is a direct bank transfer that instantly appears in the other person’s account. This means that, like Venmo, Zelle makes it easy to pay the wrong person. And if this happens, their customer support won’t help with the dispute.
How to decline a Zelle payment?
If your bank accepts Zelle, it’s impossible to stop a rent payment. The payment gateway facilitates instant transfers, and you can’t block an unwanted payment. In addition, Zelle makes it difficult to avoid partial payments from a tenant you are trying to evict.
Using Zelle for rent payments
Zelle is a payment gateway, making it easy for tenants to pay rent. A benefit to landlords of using Zelle is that there are no fees to pay (bank dependent), and money goes to your bank account. However, it’s impossible to decline a Zelle payment.
Related reading: Venmo vs. Zelle for rent payments — which is best?
Collecting Rent with PayPal
Tenants can pay rent with PayPal by entering the landlord’s username, email address, or mobile phone number. Therefore, collecting rent with PayPal is similar to Venmo — after all, PayPal owns Venmo. The online rent payment instantly arrives in your PayPal account. You then transfer rental money to your bank account.
How much does PayPal cost to collect rent?
PayPal is expensive to collect rent because it has hefty transaction fees. It’s impossible to use PayPal “Friends and Family” for business transactions. PayPal fees for business transactions can cost up to 3.5%, depending on the payment type.
Rent payments and PayPal limits
Tenants who use PayPal for rent find it relatively straightforward. Users can transfer up to $60,000 in a single transaction after providing bank account information and verifying their identity. However, it is vital to remember that PayPal can limit payments if they suspect suspicious activity. This means that they block payments and freeze money unexpectedly.
How to cancel a PayPal payment?
There is no cancellation policy with PayPal to stop a payment. Like most digital apps, PayPal was designed to send money instantly between friends. Therefore, if the tenant makes an authorized payment with the wrong details, the rent money will end up in the wrong hands.
How to decline a PayPal payment
Like Venmo and Zelle, it’s impossible to block a partial rent payment when evicting a tenant. So, suppose your rent collection policy includes PayPal as an acceptable payment method. In that case, you must wait until the fixed-term lease ends. This means you could have a non-paying tenant in your rental property for months.
PayPal for Rent collection
Tenants find it easy to pay rent using PayPal. However, to run a successful rental business, PayPal is a terrible option. Processing fees are expensive, and you can’t stop a payment or automatically calculate late fees. In addition, PayPal’s Terms and Conditions say that there is no payment protection for landlords as real estate transactions aren’t covered.
Related reading: Five reasons to stop using PayPal for rent collection.
Collecting Rent with Rentdrop
Rent payment apps like Rentdrop make it simple to pay and collect rent. Tenants have handy features like recurring rent payments, split rent, and paying rent using a credit card or debit card. In addition, rental property owners can set up payment reminders, block a partial payment, and automatically calculate late payment fees.
How much does Rentdrop cost to collect rent?
Rentdrop is free to collect payments from tenants. Therefore, landlords never have to pay fees for an incoming payment. And tenants can make monthly rental payments using a direct bank deposit or debit card. Tenants can also pay rent by credit card, and the transaction incurs a small processing fee.
Rent payments and Rentdrop limits
Rentdrop is a dedicated rent payment app. Therefore, tenants can pay rent in full every month. It is free and easy to sign up for Rentdrop. Tenants can connect their bank account and payment cards to the app. As a landlord, all you have to do is connect your bank account to start receiving rent payments.
Rentdrop has high weekly payment limits, and the funds transfer takes place in four days or fewer.
How to decline a rent payment
One of the advantages of Rentdrop over Venmo, Zelle, or PayPal is the option to block a partial payment.
Why is this an essential feature of a rent collection app? Suppose you are evicting a tenant for non-payment of rent. In that case, you can use the option to accept rent payment in full. This forces the tenant to adhere to the “cure or quit” notice. It then becomes easier to receive rent in full or get rid of a problem tenant.
Other features of Rentdrop for rent collection
Rentdrop offers features to make paying and collecting rent straightforward. The problem with digital apps like Venmo or Zelle is that they only facilitate rent payments. They don’t have features for landlords and tenants.
Here are some of the features of Rentdrop that landlords and tenants love:
- No subscription fee: Rentdrop helps improve your cash flow because there are no fees to pay. Unlike some property management apps, all the features of Rentdrop are free.
- No fee to receive payments: Landlords don’t pay a cent in bank transfer fees or debit or credit card processing fees.
- Send payment rent reminders: A handy feature of Rentdrop is that you can send tenants rent payment reminders. This is one of the many ways Rentdrop encourages on-time monthly rent payments.
- Block partial payments: The most crucial feature of a rent collection app is to block partial payments. This feature sets Rentdrop apart from a mobile payment app because it gives you control over rent payments.
- Automatically calculate late fees: Rentdrop automatically charges the applicable late fees to next month’s rent if a tenant misses a monthly rent payment. This is an excellent way to cut your administration tasks and paperwork.
- Split rent with roommates: The split rent feature is invaluable if you have co-tenants in a multi-tenancy rental unit. Each tenant on the lease agreement is responsible to you for their rent payments.
- Set up recurring monthly payments for renters: Tenants find it helpful to set up automatic monthly rent payments. This means they can set it up once and forget about payment issues with late fees.
- Report rent payments to credit bureaus: This feature is coming soon to Rentdrop. It allows a tenant to use their monthly rent payment to build their credit score. This is not only great for tenants, but it encourages them to pay rent on time.
Why Choose Rentdrop for Rent Payments
Rentdrop is a trusted online rent payment service for landlords and tenants. It allows landlords to accept online payments for rent using several forms of payments. In addition, the handy app has crucial features you need to run a successful rental business.
So, why not sign up for Rentdrop today. It is free to subscribe to, and you can start collecting rent for free without any hassle.