Investor · Henderson, NC · Member since 2016 · 484 posts · 208 votes
10y
The regular swipe card rate is only something like 2.7%, but on a thousand dollar rental that is $27/month. That adds up REAL quick. Only way I'd accept that is if it the tenant pays all the fees, but I'm not sure if that is even legal.
Lender · San Antonio, TX · Member since 2016 · 1k+ posts · 1k+ votes
10y
@David Dachtera If all you are ever doing is keying in card numbers, and never swiping, Square will shut your account down real quick for fear of fraud. There's a lot of online services that are better catered to that.
Why not set up a automatic EFT draft? Much cheaper.
Architect · Papillion, NE · Member since 2015 · 1k+ posts · 840 votes
10y
erentpayments.com allows tenants to pay via credit card. I have not used this. I know there is setup fee but not sure about other fees. There is a $3 fee for paying via bank checks and transfers.
@David Dachtera If all you are ever doing is keying in card numbers, and never swiping, Square will shut your account down real quick for fear of fraud. There's a lot of online services that are better catered to that.
Why not set up a automatic EFT draft? Much cheaper.
You ARE aware that "Square" is that little thing which plugs into your smart phone and you swipe cards on it, right?
EFT assumes they have funds on deposit. As long as their credit card is not maxed out or in default, I can still get paid.
For my small portfolio, that would cost me about 14% of cash flow per year if all tenants used it. So, for me it would be a foolish expense.
How does 3.5% get multiplied to 14%?
...and how does 3.5% compare to the cost of your time and effort to collect rent checks and deposit them?
How does 3.5% become 14%? Because it is 3.5% of GROSS rental revenue, but 14% of NET PROFIT.
If we use an example of a home that rents for $1000, and has a monthly cash flow of $250 after expenses. The CC fee is $35, which is $14% of the $250.
... except that the fee comes out "above the line", not below.
... and if it makes the difference between getting paid and not, guess which I choose? If they don't send a check (make an on-line payment, etc.), I (my property manager) show up, swipe a credit card, and I'm paid for that month, at least.
@David Dachtera I would highly recommend that you check out cozy.co I'm pretty sure they have a great system for this and I think its FREE!
If they don't send a check (make an on-line payment, etc.), I (my property manager) show up, swipe a credit card, and I'm paid for that month, at least.
... except that the fee comes out "above the line", not below.
... and if it makes the difference between getting paid and not, guess which I choose? If they don't send a check (make an on-line payment, etc.), I (my property manager) show up, swipe a credit card, and I'm paid for that month, at least.
Think of it as "Plan B" instead of S.O.P.
Sorry, if I have a tenant getting into a situation where a credit card is their only hope, then I'd rather bite the bullet and get to the eviction/terminate lease. Someone that far on the edge is going to end up there anyway. The sooner you deal with non-payment the better.
@David Dachtera If all you are ever doing is keying in card numbers, and never swiping, Square will shut your account down real quick for fear of fraud. There's a lot of online services that are better catered to that.
Why not set up a automatic EFT draft? Much cheaper.
You ARE aware that "Square" is that little thing which plugs into your smart phone and you swipe cards on it, right?
EFT assumes they have funds on deposit. As long as their credit card is not maxed out or in default, I can still get paid.
I am aware - used to use one. So your plan is to go to the renter every month and swipe their card, because that will be easier than getting them to mail you a check?? Use an online service like Converge, instead of square, that allows you to type in their card number so you only need to get it from them once.
I found that their cards would get declined more often than not when I tried this to collect. EFT worked just as often, since most "credit cards" people gave me were actually debit cards, so it was pulling from the same funds, just the EFT from Quickbooks is much cheaper than a credit card processor.
@David Dachtera If all you are ever doing is keying in card numbers, and never swiping, Square will shut your account down real quick for fear of fraud. There's a lot of online services that are better catered to that.
Why not set up a automatic EFT draft? Much cheaper.
You ARE aware that "Square" is that little thing which plugs into your smart phone and you swipe cards on it, right?
EFT assumes they have funds on deposit. As long as their credit card is not maxed out or in default, I can still get paid.
I am aware - used to use one. So your plan is to go to the renter every month and swipe their card, because that will be easier than getting them to mail you a check?? Use an online service like Converge, instead of square, that allows you to type in their card number so you only need to get it from them once.
I found that their cards would get declined more often than not when I tried this to collect. EFT worked just as often, since most "credit cards" people gave me were actually debit cards, so it was pulling from the same funds, just the EFT from Quickbooks is much cheaper than a credit card processor.
Syndication Expert and Investor · Indianapolis, IN · Member since 2016 · 591 posts · 808 votes
10y
You can always just charge the CC fee to the tenant. You can even round the 3.5% up to 4% for the convenience and increase revenue while encouraging whichever method of payment you prefer.
I've used Intuits GoPay system for another buisness and I think it only has a fee of under 2%. We take CC info over the phone all the time and enter it in, deposits directly to our account.
Isn't that a contradiction in terms? Paid service = monetized.
In conversation, people sometimes are able to infer implied meaning. I see I'm not dealing with one of those people. I'll help you out. Just because a service is paid for, that doesn't mean that service is not monetizing your data in ways you have no knowledge of. It's commonly said of Facebook, if it's free, then you're what is being sold. The fallacy in that statement is, if it costs you money, it doesn't mean you're not being sold as well. Welcome to the future, we are all a commodity and you don't escape it by false comfort in your paid service.
Fort Collins, CO · Member since 2014 · 397 posts · 161 votes
10y
Thank you @Jim Adrian as our card fees are 2.95% for credit cards and 1.5% for debit cards so that can definitely add up but I see @David Dachtera point about collecting the rent by any means possible.
You have to be careful as some states do not allow you to pass a "surcharge" to the tenant for using a credit card instead of paying by ACH. I know @Spencer Gray mentioned that and it is allowed in Indiana but not every state. Here is a good link if you ever need to confirm if your state will allow you to pass back to the fees to the tenant:
Rental Property Investor · Indianapolis, IN · Member since 2016 · 200 posts · 87 votes
10y
I have one renter that pays via paypal. If the money is in their account and taken from a checking account then I don't get charged a fee so it works pretty well.
Rental Property Investor · Yardley, PA · Member since 2008 · 1k+ posts · 561 votes
10y
@David Dachtera, explain what you mean by "above the line?" In my mind the fee comes out of the entire rent, BEFORE any expenses. So, it is not simply the fairly small % you are losing. Also, you will likely be keying in the card numbers every month, so you will be hit with the higher rate.
So, Dave, show me the math where, using my example, it is not costing you 14% of your cash flow.