Online rent collection is one of the most attractive features of property management software.
This feature relegates cash and check payments to the past. Instead, rent payments are entirely digital. Compared to traditional methods, online rent collection offers increased security and efficiency.
However, moving rent online still gives tenants options. On most property management software platforms, tenants can choose from three different ways to pay: debit, credit, and ACH transfer. Each option has its benefits and drawbacks. Many tenants prefer one method over the others.
Thankfully, whether your tenants pay by debit, credit, or ACH transfer doesn’t make too much of a difference to you. You’ll still receive regular deposits in your designated bank account no matter how your renters pay. However, there are some differences you should be aware of if you offer these options to your tenants.
What follows is more about the three ways to collect rent online.
Tenants who choose to pay by debit link their bank debit card to your property management software. When it comes time to pay rent, tenants simply log on to their account, select the option for debit, and submit the payment. Within the following few days, the tenant’s bank will transfer the funds from their checking account to the landlord’s account.
Debit card payments offer renters some flexibility. For example, if you rent to college students, they may not have the income necessary to own a credit card. Students who don’t have credit can easily obtain a debit card from their bank to make online payments.
However, debit payments will usually incur pesky convenience fees. They’re also thought to be less secure than credit payments. These concerns are more for your tenants than you, but be aware that some tenants may be uncomfortable paying with debit for any of these reasons.
Credit cards are a popular and dependable way to pay rent. When tenants pay by credit card, rent is charged to their card like any other credit purchase. You will receive the funds promptly, but the tenant will actually make the payment whenever they pay off their credit card bill.
Credit payments offer several benefits for tenants. Some renters may want to pay by credit to build their credit score. Others may need to wait for a payday before paying rent, so credit gives them some extra time to secure the necessary funds.
Like debit, credit payments do incur small convenience or processing fees. However, credit is also considered generally safer than debit. This is because payments need to go through the third-party credit card company before they reach anyone’s bank account. While digital security breaches on property management software platforms are rare, many tenants are accustomed to using credit online for security reasons despite the associated processing fees.
However, credit payments do come with some risks for landlords. Credit requires tenants to be responsible for paying off their debts. If your tenants don’t have strong credit or consistently make late payments, this could be a major problem for your rental business.
You can mitigate this risk by making sure you thoroughly review credit reports for all your tenants during the screening process.
For most tenants (especially those who don’t use credit), it makes more sense to make payments by ACH transfer.
- ACH Transfers
ACH transfers, also known as eChecks, are the simplest and cheapest of the three options. ACH transfers are payments managed by the Automated Clearing House.
How do they work? It’s relatively simple. Tenants link their bank account directly to your property management software. When rent is due, funds are transferred directly from the tenant’s bank account to yours without the intermediary of a credit or debit card.
ACH transfers are fast, typically taking around one to two days to process.
This method is attractive to renters because it doesn’t charge additional fees. Like all online methods, there is the possibility for bounced payments if a tenant doesn’t have enough money in their account to cover the charges. However, the short processing time means that if this happens, you’ll know sooner rather than later.
Collect Rent Online with Property Management Software
Online rent collection is the future (and the present) for all shapes and sizes of rental businesses. All three online payment options are superior to traditional methods, offering security, convenience, and the ability to automate payments with AutoPay features. Upgrade your rental business by using the rent collection feature on your property management software.