January 13, 2015

What Should You Know About Accepting Electronic Payments for Rent?

tenant making rental payment online

How does a Landlord know if they should accept Electronic Payments for rent? The check has become an outdated form of payment. There are many options available with today’s technology.

The most popular form of payment seems to come in the form of direct rent deposits. This can be done by Direct Deposits into the Landlords account or Automatic Withdrawal from the tenant’s bank account.

There can be some risks, but it very convenient, especially for out-of-town Landlords. Here are a few of the many forms of electronic payments landlords may want to consider accepting.

Automatic Withdrawals

Other than the tenant not having sufficient funds in their account or funds available on their credit card, there is little risk to the Landlord. It decreases administrative costs and provides convenience.

Direct Deposits

There are always risks when you give a tenant your banking information. Make sure that access is limited. In this case, the tenant controls the payment. Partial payment can delay eviction processes if the situation would arise. Protect yourself by carefully drafting your lease.

PayPal

PayPal has always been and still is a trusted and secure form of web-based electronic payment. The Landlord only needs to give the tenant their email address. The downside to PayPal is that there is a delay transferring funds from PayPal account to Savings or Checking account and as with Direct Deposits partial payment can delay eviction.

Accounting

Some states do not allow security deposits and rent to be held in the same account. Check with your state to see you need to have a separate account for Automatic Withdrawal or Direct Deposit.

It is up to you to determine which form of payment works best for you. Choose the most convenient and lowest risk method. Understanding Local and State laws, along with careful planning can minimize your risks also.