Using PayPal or Venmo for Rent Collection — Is it a Good Idea? 

As time passes and technology improves, our society moves further toward cashless payments for  goods and services. Apps like PayPal and Venmo are user-friendly and convenient when repaying a  friend for a coffee or splitting the bill at dinner, making them extremely popular for day-to-day  transactions. But does this same ease apply when collecting rent from your tenants? 

Unfortunately, the answer is no. Using peer-to-peer (P2P) apps like PayPal and Venmo (though  there are many more out there) as a rent payment app can be costly in the long run and get you  into trouble down the line if you’re not careful. Let’s look at why these apps aren’t a good idea for  collecting rent and how you can use better methods to simplify and automate tenant payments. 

Why PayPal and Venmo Fall Short 

Because these apps are so user-friendly and quick to use, it seems like they would be perfect for  rent collection, but they often bring more headaches than they’re worth. For instance, using P2P  apps is tedious because you’re required to set up a business account in order to collect rent  payments. Legally, this can get tricky — using Venmo for rent with a personal account is directly  against their policies and could force you to lose out on collections or an eviction case. 

Using these apps can also be less than ideal financially. As mentioned, P2P apps charge extra fees  on business transactions, so asking your tenant to make a PayPal rent payment could add an  extra 1.9%-3.5% charge as well as a fixed fee between 5 and 49 cents. This may not sound like a big  deal, but even a $100 payment can add between $2 and $3.99, and the more properties you have,  the more that number eats into your revenue. 

Even further, P2P apps take away your ability as a landlord to deny payments since the money goes  directly to your account. Denying payments is a power you shouldn’t take for granted, especially  when looking to evict a tenant for overdue payments. As a landlord, you have the right to full  payments and shouldn’t give up your ability to deny partial payments, which can further complicate  evictions. You also lose control over enforcing late fees since requests for payments can be denied  on the app by the tenant, stripping away your financial power. 

Implementing Property Management Software Instead 

While there are many alternatives to using P2P apps for rent, one of the most helpful is property  management software. Unlike PayPal and Venmo, these services are designed with landlords in  mind and build in tools that offer the same convenience as digital payment apps. Property  management software can automate payments, send due-date reminders, enforce late fees, and  more depending on your needs, directly easing the hassle of keeping track of rent collection. 

Among other benefits, property management software can lower or eliminate extra fees altogether.  Almost all property management platforms significantly lower fees on a transaction-by-transaction 

basis compared to the professional fees charged by apps like PayPal. Innago, for example, is 100%  free to use for landlords and property managers, and the benefits listed are all included with the  software. 

Property management software is also built with the real estate industry in mind, so the platforms  will offer tools unique to landlords and property managers to simplify rent collection. Many of these  software platforms allow you to prorate rent, set and enforce late fees, and create recurring  invoices to empower you to put your energy into other tasks. 

Finally, some (but not all — do your research!) property management software is designed to  provide support every step of the way when creating and running your account. Issues or mistakes  are bound to arise with rent collection, and you want a company that will dedicate the time and  care to your unique business and tenants. 

Finding a Payment Method That Works for Your Business 

We’ve gone over payment systems you shouldn’t use and alternative methods to simplify your rent  collection process each month, but there are many other options to consider before deciding how  your tenants should send you payments. Searching for the method that best fits your needs and  criteria as a landlord will allow you to save time and energy as you grow your rental business, so  don’t overlook its importance!