Zelle is a popular alternative payment app for tenants who want to pay rent money online, not by check or cash. Zelle works as a payment gateway to transfer rent payments from their bank account to their landlord’s. Using Zelle, tenants can pay rent by debit card, credit card, or bank balance. For landlords, Zelle simplifies part of the rent payment process.
However, if Zelle is so great for rent payments, why should you look for an alternative?
The answer is simple—Zelle doesn’t have valuable tools for landlords and tenants to make the rental process straightforward.
Of course, paying rent with Zelle means you can ditch rent checks. But that’s about it. Zelle doesn’t have options to set up recurring online payments, split rent with roommates, get rent reminders, or report rent payments to credit bureaus.
Why look for alternatives to Zelle to pay rent money online? Knowing the issues Zelle can create for landlords and tenants provides compelling reasons to switch to an alternative digital payment app.
Please read on if you’re looking for a simple, easy, free rent payment platform to collect rent money online.
How Does Zelle Work for Rent Payments?
Tenants can use Zelle as a bank payment gateway or peer-to-peer payment (P2P) app to send rent money directly from their bank account to yours. There are no fees to send money; typically, the rent money arrives in your bank account within minutes.
To make a rent payment with Zelle, the tenant enters your email address or phone number and the rent amount. After clicking send, the money is transferred and shows up almost instantly in your bank account.
For landlords and property managers considering using Zelle, there are a few things to consider. For example:
- Not all banks and credit unions support Zelle payments for business transactions—even though they may support personal payments.
- Your bank may charge fees to accept Zelle business payments.
- Zelle limits payments to $500 per week if the bank doesn’t support the payment gateway.
- Zelle is a target of many fraudsters, and some tenants don’t want to use the app to send rent money.
On the positive side, Zelle doesn’t charge fees to send money between bank accounts. This contrasts with Venmo and PayPal money transfer apps that charge hefty fees for business transactions.
Five Reasons to Use an Alternative to Zelle to Collect Rent Money From Tenants
To make an informed decision on choosing the best app for rent payments, it’s vital to examine where Zelle fails. Although Zelle offers several payment methods, landlords and tenants find that online rent payments are its only advantage.
Here are five essential tools for rent collection that are missing in Zelle.
Decline a Zelle payment
Zelle is famous for its instant bank transfers. However, this feature makes it impossible for a landlord or property manager to block a partial rent payment. Blocking a partial payment is crucial in a rent collection app because it’s necessary during eviction proceedings.
Why would it be necessary to decline a Zelle payment? Suppose you have taken eviction action against a tenant for non-payment of rent or another lease violation. In that case, you must have the ability to block a partial rent payment. Otherwise, the delinquent tenant could make a quick transfer of a few dollars to derail the eviction process.
Therefore, using Zelle for rent payments could result in a lengthy and costly eviction process because it’s impossible to block a partial payment.
Split rent with roommates
Zelle doesn’t work to split rent with roommates. But wait—is Zelle not a popular money transfer to send money to friends and family? Surely, you can use it to split rent with roommates. But unfortunately, rent spitting is not an option for Zelle.
Roommates could use Zelle to send their portion of the rent to one tenant. That tent would then be responsible for paying the landlord the entire monthly rent. However, this rent payment method could cause issues between roommates.
For example, what happens if one tenant cannot make the monthly rent payment? In that case, all the co-tenants risk being evicted unless someone comes up with the deficit.
Automatic late fee calculation
A handy feature for landlords that Zelle doesn’t have is calculating late rent fees. Without this, you must calculate late fees based on the grace period, state laws, and rental agreement. However, this is extra administration work for you. Would it not be simpler to have this done automatically?
The lack of late rent fee calculation can cause another issue for landlords—you avoid being accused of discriminatory behavior. The Fair Housing Act requires you to treat all tenants fairly. This means it’s a serious violation to charge late fees to some tenants and not others.
Report rent payments to credit card bureaus
Zelle doesn’t have an option to report on-time rent payments to the major credit bureaus. There are several reasons why missing this feature is a reason to look for an alternative. Here are a few:
- Tenants are more likely to pay rent on time
- Tenants will pay rent online to improve their credit score and build credit history
- Landlords can offer tenants a better service
- Fill vacancies faster
- Improve landlord-tenant relations
According to research by TransUnion, landlords who report rent payments find it easier to attract responsible tenants. Also, reporting rent to credit bureaus can decrease late rent payments by up to 50 percent.
Send rent reminders to tenants
If you want to ensure tenants never miss a monthly rent payment, send them a friendly reminder. Unfortunately, this is another feature lacking in Zelle. Of course, you can use a third-party app to send rent reminders. But that involves more time setting it up.
Popular Zelle Alternatives Payment Apps for Rent Payments
The most common alternatives to Zelle to make online rent payments are Venmo and PayPal. How do these two P2P payment apps stack up against Zelle when it comes to paying rent money online? Are there suitable dedicated rent payment options landlords can use for free?
Venmo vs. Zelle for Rent Payments
Zelle is better than Venmo for paying rent money online because there are no fees. However, Zelle only works for rent payments if the tenant and landlord’s banks support business transactions. If not, Zelle limits the tenant’s payment to $500 per week. Also, Venmo charges fees to accept rent payments.
Unfortunately, the same rent payment issues of Zelle also plague Venmo. Therefore, Venmo isn’t a suitable alternative for rent payments.
Related reading: Zelle vs. Venmo for rent payments.
Zelle vs. PayPal for Rent Payments
Is PayPal a suitable alternative for rent payments? Unlike Zelle, landlords must pay a transaction fee for every incoming PayPal business payment. Compared to other instant money transfer apps, PayPal business fees are some of the most expensive—up to 3.49% per transaction.
PayPal also lacks rent payment options that landlords and tenants need. In addition, PayPal is the most expensive peer-to-peer payment app to collect rent from tenants.
Compared to Zelle, PayPal is a poor alternative payment method.
Related reading: Should you use Zelle, Venmo, or PayPal for rent payments?
Zelle vs. Rentdrop for Rent Payments
How does Zelle compare with a Rentdrop—a popular rent payment? Like Zelle, Rentdrop lets tenants pay rent online for free, and there is no charge to landlords to receive rent payments. However, Rentdrop has tools for landlords and tenants to simplify the rent collection process.
For example, Rentdrop encourages on-time rent payments because tenants can set up automatic rent payments, split rent with roommates, and receive payment reminders. Additionally, Rentdrop will soon feature rent reporting to credit bureaus.
Unlike Zelle, Rentdrop makes it easier for landlords to collect rent from tenants. First, there are no fees to accept rent payments, regardless of the bank you use. Also, you can send rent reminders and automatically charge late fees for missed payments.
One of the most crucial differences between Zelle and Rentdrop is the option to block a partial payment, putting you in control over payments.
Why Choose Rentdrop as an Alternative to Zelle For Rent Payments?
Rentdrop is packed with rent payment features that benefit landlords and tenants. For example, using the handy rent collection app means you can avoid collecting rent in cash, and it’s an excellent alternative to paper checks.
Let’s look at what Rentdrop offers tenants and landlords to see how it simplifies the rent payment process.
Rentdrop lets landlords bock a partial payment
Rentdrop’s partial payment blocking feature is vital for landlords during an eviction process. This option allows you to stop a tenant from making a partial rent payment. The app will reject any amount for rent that is not the entire month’s rent, late fees, and rent arrears.
Tenants can set up automatic payments to pay rent
Tenants can never miss a rent payment again using Rentdrop. All they do is set up their payment schedule, and the rent money is automatically transferred from the designated source—debit card, credit card, or bank account balance. Recurring rent payments are one of the best ways to prevent late payments.
Tenants can split rent with roommates
Rent splitting in Rentdrop is a handy feature for roommates. Each co-tenant can pay their share of the rent directly to you every month. This option encourages personal responsibility and makes managing a multi-tenancy rental unit easier. It also reduces friction and disputes between co-tenants.
Rentdrop automatically calculates late rent fees
Rentdrop saves you time by calculating late fees automatically. For example, suppose a tenant pays rent several days late. In that case, Rentdrop calculates the correct amount of fees to charge based on the lease agreement, grace period, and local rent control laws.
Tenants can pay rent using various payment methods
Rentdrop accepts debit card or credit card payments and direct bank deposits. This avoids needing to meet tenants in person to accept cash payments or process rent checks. You also provide an excellent service for tenants by providing several convenient ways to pay rent online for free.
Tenants also benefit because they don’t pay fees for bank transfers or debit card payments. They will only incur a minimal fee for credit card transactions.
Rentdrop reports rent payments to credit bureaus
A feature soon to appear in Rentdrop is reporting rental payments to credit bureaus. This valuable service to your tenants encourages on-time monthly rent payments. Additionally, tenants love the fact they can use rent payments to build healthy credit history.
Send payment reminders to tenants
An automated feature of Rentdrop to simplify the payment process is sending reminders. Rentdrop will send tenants reminders automatically via email or text message. This option is a great way to prevent late payments and stabilize your cash flow situation.
Rentdrop — A Suitable Alternative to Zelle for Rent Payments
Rentdrop is an excellent option for rent payments because it allows tenants to pay rent online for free and has tools for landlords.
Comparing Rentdrop with Zelle shows that both online payment apps facilitate fast money transfers. However, Zelle has no incentives to encourage on-time rent payments or has tools for landlords. It could also put your rental business at risk because you can’t block a partial payment.
If you are a landlord or tenant, why not sign up for Rentdrop today. The dedicated rent payment app is free to use, and you can soon start experiencing how easy it is to make rent payments.