There are a handful of convenient ways to collect rent online — you can use a payment platform like Zelle or apps specifically designed for rent collection. Both options have their pros and cons with some offering convenience while others make it easier to track rental income.
Before you commit to a payment platform, know which ones have fees, the transfer limits, and what each platform allows when you’re paying and collecting rent.
Key Takeaways
- You can use payment platforms like Zelle, Venmo, and PayPal to collect rent payments but it’s important to note these options are primarily intended for personal use only.
- If you collect payments through these platforms, you will need to manually track your rental income to then share with a certified personal accountant or tax professional.
- Platforms like Zelle, Venmo, and PayPal do not offer payment protection for tenants in the case they send a payment to the wrong person.
Can Landlords Use Payment Apps Like Zelle, Venmo, or PayPal to Collect Rent?
Landlords can use payment platforms like Zelle, Venmo, and PayPal to collect rent payments, but there are a few considerations to remember. Zelle is the only option that does not charge fees, while Venmo and PayPal will since they consider rent a business-related payment.
You may also experience issues with payment tracking, need help retrieving a tenant’s payment if it is sent to the wrong person, and potential account freezes if rent collection goes against their terms of use.For this reason, most landlords who collect payments from multiple tenants prefer to use platforms specifically designed for rent collection to avoid such issues.
Collecting Rent With Zelle
Zelle is a payment platform that lets you send money between certain bank accounts without fees. This platform is mainly used to send and receive money from friends, family, or other trusted people, but it is also used for online rent collection.
1. Payments
Zelle offers quick processing times and does not charge fees to use. Funds will show up in your account instantly, but it can take around one business day for the money to clear. There aren’t any fees to send or receive money, but Zelle limits transfer to around $1,000 a day and $5,000 a month, depending on your bank.
2. Ease of Use
Zelle doesn’t partner with every bank, and if a tenant’s bank or credit union doesn’t offer Zelle, the weekly send limit is $500. Landlords can request rent payments, but automatic, recurring payments can only be set up if the tenant’s associated bank supports them.
3. Using Zelle for Rent Collection
While Zelle offers ease and convenience, it is not intended for rent collection, so there are limitations to this platform to know of. For one, Zelle does not issue 1099-K forms or report any transactions that total more than $600. With the 1099 requirement, the Internal Revenue Service (IRS) will require landlords to report rental income exceeding $600 versus $20,000.You can manually track each payment with a spreadsheet, but this can require too much time, especially if you receive rent from more than one tenant.
Additionally, Zelle does not allow you to set up automatic late fees or stop payments from a tenant you’re evicting. The ability for tenants to make full or partial payments at any time using Zelle can be problematic — especially during an eviction. Accepting a payment as small as $1 can stop eviction altogether.
Overall, Zelle may be a short-term solution to online rent collection. But if you plan on collecting over $20,000 in payments, it’s best to find a different platform designed for rent collection.
Collecting Rent With Venmo
The payment app is best known for peer-to-peer payments, but Venmo allows for rent collection. Venmo charges fees for business transactions and, more recently, any payment identified as “goods and services” — two categories under which rent collection may fall.
1. Payments
Like Zelle, Venmo transactions show up in your account instantly, but payments take one to three days to process. Initially, there’s a $299.99 limit on Venmo transfers, but after the user’s identity is confirmed, the limit is comparably high at $2,999.99 per week. Note that the user has to go through extra steps to verify their identity and raise their weekly limit.
2. Ease of Use
Both parties just need the Venmo app to send and receive payments. Landlords can request rent payments from tenants, but keep in mind that rent payments likely need to be classified as a business transaction, which comes with a 3% fee.
If you’re labeling rent payments as “goods and services,” Venmo now charges a fee of about 2% for these transactions, too. Venmo will cancel accounts that try to disguise business transactions as personal ones.
3. Using Venmo for Rent Collection
Venmo is a quick, user-friendly way to make payments, but it was built for easily paying people you know. There’s no option for recurring, automatic payments or late fees, and like Zelle, a landlord cannot stop or decline a payment.
Keep in mind that there aren’t any protections for landlords or tenants when sending rent money through Venmo. If a tenant sends their rent to the wrong person, Venmo won’t refund the money to the tenant or redirect it to the landlord.
On the bright side, Venmo does provide a 1099-K form if you receive more than $600 for sales of goods and services — which in this case, would be rent.
Collecting Rent With PayPal
Rent can be paid and collected through PayPal, but similar to Venmo, there’s a fee of about 3% for each business transaction. PayPal requires that all money for goods and services (which includes rent) are accepted through a business account.
1. Payments
Once an account is verified, PayPal doesn’t cap the total amount of money that can be sent. According to PayPal’s Help Center, a user can send up to $60,000 (but may be limited to $10,000) in a single transaction. Keep in mind that when you’re paid, the money goes into your PayPal account, not directly into a bank account.
2. Ease of Use
Both parties need to set up PayPal accounts to send and receive money. Users have the option to pay with a bank account, debit card, credit card, or directly from their PayPal account balance, and transactions typically take from 30 minutes up to one business day to process.
3. Using PayPal for Rent Collection
While the platform is good for sending large sums of money, note that PayPal will flag and sometimes freeze accounts with irregular activity. Keep this in mind if you’re receiving multiple rent-associated payments in a single transaction. PayPal also offers more protections than Venmo in that they’ll usually refund money if there’s a valid dispute, but this can sometimes take weeks.
Tenants can dispute transactions through PayPal. When payment issues arise, the platform will often side with the payer (or in this case, the tenant). If you collect more than $600 through PayPal, you will receive a 1099-K form to report to the IRS.
Collecting Rent With Avail
Avail (part of Realtor.com®) is a rent collection app specifically designed for online rent collection. Features like the option to set up automated rent reminders and payment tracking can help make the process more streamlined. Tenants can also benefit from paying rent with Avail, which can help encourage on-time payments.
1. Payments
Once you enter the lease details, the rent amount, and the tenant’s name and email, our system helps the tenant get set up to pay their rent online.There is a 3.5% processing fee for credit and debit card payments, and a $2.50 transaction fee for bank transfers.
Payments are deposited directly into the landlord’s account within three to five business days. For faster processing times and waived ACH fees, you can upgrade to Unlimited Plus to leverage FastPay to have rent payments deposited to your account as soon as the next day and more.
2. Ease of Use
Landlords can invite their tenants to sign up for a free Avail account. Both parties have electronic access to important rental payment information through their account, including scheduled rent payments and payment history, payment tracking, and rent receipts. Avail is optimized for mobile use, so you can easily access your account from your phone or another smart device.
3. Using Avail for Rent Collection
Because the Avail online rent tool was designed specifically for rent payments, it offers features other payment platforms don’t — like the ability for tenants to turn on Autopay or report on-time rent payments to TransUnion. Landlords can also set up payment schedules, automate late fees, set reminder emails about upcoming rent, and amend or cancel future rent payments. Landlords that collect more than $600 in payments will receive a 1099-K form.
An additional benefit to Avail rent collection is that you can also track rental income and expenses for free. The Rental Property Accounting tool automatically populates collected payments and logged maintenance costs to track your finances. For payments collected outside of Avail, you can manually input them and upload relevant receipts for future reference.
Avail offers live customer support seven days a week, so if either you or your tenant has an issue, someone from the Avail team is always available to help you solve it.
Avail vs. Zelle vs. Venmo vs. PayPal Comparison Chart
Zelle and Venmo are primarily used for personal use, which is why they don’t offer features aimed at making rent collection easier, such as rent reminders, rental income tracking, and credit reporting tools. PayPal, on the other hand, is intended for business use with the right subscription, but still falls short of providing tools specifically intended for online rent collection.
Rent collection apps like Avail are primarily designed to streamline rent collection, automate rent reminders, track rental income, and charge late fees.
What To Look For in an Online Rent Collection System
The right rent collection system will offer convenience, security, and overall a better experience to ensure you get paid on time every month. When looking for a platform, it’s important to look at several factors, such as:
- Ease of use: The platform should make it easy to onboard your new renters with an easy-to-read dashboard that shows when rent is due, allowed payment methods, and previous transactions.
- Secure payment processing: Ensure the platform offers bank-level encryption to protect payment data, secure login features that offer multifactor authentication, and adhere to Payment Card Industry Data Security Standards.
- Ability to block partial payments: Being able to block partial payments is primarily important in the case of evictions. A partial payment as small as $1 can impact eviction proceedings, which is why it’s important to have the option to block payments.
- Multiple payment methods: Allowing tenants to pay rent with either a credit card, debit card, or bank transfers can increase your chances of getting paid on time, especially in the case of a card issue.
- Recurring payment and rent reminders: To avoid late fees, look for a platform that allows tenants to schedule their rent payments and other fees to automatically withdraw each month. Additionally, see if tenants can be sent monthly rent reminders a few days before rent is due to avoid late payments due to forgetfulness.
- Automated late fees: The platform should automatically charge late fees when a tenant misses a payment deadline and is officially past the grace period (if any).
- Record-keeping: During tax season, you will be responsible for reporting rental income, so you’ll need a way to track all rent payments, late fees, and any additional charges to share with a tax professional. It’ll also be helpful to have access to rent ledgers, tenant ledgers, and payment status for all your rentals.
- Customer support: In case issues arise, look for reliable customer support that can help in a timely manner.
Rent Collection Made Easy
Each platform offers its pros and cons, but it’s best to choose an option to help you make rent collection more manageable. To get started with Avail, create an account for free to set up your rental properties and tenants. Once you set up your account, you can take advantage of all the different features to save time and money as a landlord.
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