Best method for rent collection

[Tony Lopes]

I'm curious what methods other landlords use to collect rent each month.

I like collecting rent in person each month because I get to see my tenants and make sure the property is in good order.  But as I grow with more units that is becoming impossible.  Plus the younger generation prefers other methods of payment.

I've used PayPal for security deposits but they charge my tenants a fee.....so it's not attractive for rent.

I'm not sure if Google Wallet charges a fee?

I'm not a fan of waiting for rent checks to arrive in my mail box....nor do I want to provide my mailing location.

Thought anyone?

[Michael Mueller]

As a small landlord, I am trying to find a way to switch from paper checks to electronic payments for rent collection, in an effort to eliminated a cumbersome, recurring task of scanning, signing, and/or visiting a bank branch, waiting in line, and depositing, or mailing and tracking paper checks. After doing some research, I came to the conclusion that with most methods proposed in various forums, the landlord is at risk of chargebacks at any time for several months after the payment, leaving the landlord to the mercy of the tenant for an extended period of time, with little to no recourse. As a result, the landlord may lose several months worth of rent without even knowing it for several months, and before eviction processes can even be started.

- Google Wallet: https://www.fatwallet.com/forums/finance/1408518 (Google Wallet has discontinued funding by credit card, but the same could probably happen with most other collection services that allow credit cards.)

- Google Wallet payment funded with bank account: https://www.biggerpockets.com/forums/61/topics/171... (the same could probably happen with most other collection services that allow payments from bank accounts.)

- Paypal: any and all transactions can be disputed by the buyer for an extended period of time with either Paypal or the funding source. Paypal typically recovers disputed amounts from recipient immediately, until dispute is resolved.

- Venmo: probably similar risks to Google Wallet or Paypal

- Cozy: allows tenants to pay with credit cards, debit cards, bank accounts, etc. Landlord cannot control payment method. Terms of Service shift liability to landlord: "If a payor or payor’s bank or card issuer initiates a reversal, chargeback, or dispute of a payment made to you, you authorize us and our third-party payment providers to reverse or otherwise debit funds from your account in accordance with applicable financial institution and network policies and procedures. In the event we are unable to reverse or otherwise debit funds from your account, you agree promptly to deposit such funds upon our request. We may also initiate a reversal or other debit, or take other actions we determine to be appropriate, if we believe fraud or other abuse of the Service has occurred."

- It is my understanding that any and all services that use ACH/EFT billing (Google Wallet, Paypal, Venmo, Cozy, ...) leaves the landlord at the mercy of the tenant, as the tenant can reverse charges simply by claiming that the ACH debit was not authorized. It appears that in many cases, the landlord gets little to say in the case and the claim resolution, as the landlord is not even the counter party of the ACH transaction, but rather the payment service.

- ACH push transaction appear to be relatively safe for payees (landlords), as they are hard to dispute. It is my understanding that the payer has to prove fraud, e.g. a hacked account, to reverse an ACH push transaction. Even then, it would be easy to prove the validity of the payment with the lease agreement. Problem: Most banks don't allow initiating ACH push payments online using recipient routing/account numbers, therefore most tenants have no way to pay via ACH directly.

- clearXchange initiated via clearxchange.com, or Popmoney initiatd via popmoney.com using recipient's email or phone number: I have not read the terms of service, but I would assume that this essentially initiates an ACH debit on the sender's bank account, leaving the landlord vulnerable to relatively easy reversals. One would think that clearXchange would be able to proof authorization of the debit transaction by the payer, but after reading the above mentioned analogous negative experience with Google Wallet, I'm not sure if this would work out in the landlord's favor.

- clearXchange or popmoney initiated via online banking interface of payor's bank: I have not read the terms of service, but I would assume that this is essentially an ACH push transaction. Not sure how this would work out if payer claims transaction was not authorized, but I would think this is relatively safe.

- Popmoney using payee's routing and account number instead of email/phone number: I have not researched this scenario, but I would assume that this is relatively safe, as the payee (landlord) does not even have to register on popmoney.com, and hence is not bound by their terms of service. The landlord therefore receives the money with an ACH push transaction, which are hard to reverse.

A possible risk scenario that I can imagine for clearXchange and Popmoney is if the tenant uses a third party payer / bank account (friend, family) who later claims fraud / unauthorized access / unauthorized transaction. The name of the payer is not visible to the recipient (landlord) on the bank statement. It is visible on clearxchange.com, though.

- In comparison, surprisingly, the traditional method (paper check) eliminates most of the risk factors of the online payment methods. If the check has the name of the tenant on it, and after the check has cleared within ca. 4 days, the transaction is almost foolproof.

I am still deliberating which way to go in the long run. While 99% of my tenants would not even consider cheating, I do not want to leave myself vulnerable to unexpected chargebacks, and/or lose or run after my money, or argue with any tenant that may run out of money or be unhappy for any or no reason, at any time. Any input to my analysis is appreciated.