The number one priority for most landlords is to collect rent in full and on time. They are always looking for new ways to make paying rent as easy and hassle-free as possible for the tenants to minimize late payment issues. At first glance, payment processing systems like Venmo seem like great options, as they allow for payments to be made and collected instantly. This approach may sound simple, but there’s more to it. This article will provide some insights on the pros and cons of collecting rent with Venmo.
Pros of Collecting Rent with Venmo
It’s no secret that there are advantages for both tenants and landlords when landlords collect rent with Venmo. Some of the benefits of collecting rent with Venmo include:
Funds Transfer Almost Instantly
Venmo is a platform that allows money to be transferred and immediately deposited into your account. All that is required from the tenant is to enter your username and contact information onto the platform and the rent amount they owe, and the transaction will take up to 30 minutes to process.
Venmo will notify you almost instantly that the payment has been made! It’s that easy to use Venmo to collect rent.
Checks are great but antiquated. Nowadays, who wants to have to take trips to the bank regularly to deposit funds? Or even drive out to pick up the rent checks from the tenants every month? Venmo allows renters to pay with the click of a button, and landlords who use Venmo to collect rent can do it from anywhere with a mobile device.
When collecting rent with Venmo, you can get what you’re owed instantly and move on to all of the other things you need to focus on. Using Venmo to collect rent gives tenants less room for excuses when they’re late on rent, such as “I’m not home” or “I’m out of town.” It doesn’t matter where they are or what they are doing; they usually have their phone with them to get it done!
Cons of Processing Rent with Venmo
Although there are some advantages of using Venmo to collect rent, there are a few risks to consider before pursuing this rent collection method.
When tenants use Venmo to pay rent, especially for the first time, they could mistakenly enter the wrong recipient information and send the money to someone else. Something as small as entering the wrong email or phone number could cause this type of issue.
As far as the tenant is concerned, the rent was paid, but for the landlord, the rent is late. This disagreement can lead to a lot of issues. You could technically try to contact the person who received the funds and kindly ask them to send the money back, but there is no mechanism to compel them to follow through.
No Protection for Either Tenant or Landlord
One of the downsides of Venmo being so easy for transferring and collecting funds is that there is no way to get it back once the money is sent. If the tenant authorizes the transaction and goes through with it, it is considered a valid payment, and the funds will not be refunded if there is an error.
Payment Processing Times
Although Venmo is considered an “instant payment” platform, payments don’t technically fully process right away. After the money is sent, it can take up to 3 business days for it to be deposited into the landlord’s bank account unless they decide to pay a fee for “instant transfer.”
In this case, the landlord could mark a payment as late and charge the tenant late fees even though the tenant initiated the transfer on the due date.
For all business transactions, Venmo charges a 3% processing fee. You could avoid it by not declaring your rent payments as business transactions, but you could get in trouble if they find out.
Allows for Partial Payments from Tenants
Because funds are automatically transferred through Venmo and received by the landlord without you having to “accept” them, tenants could technically pay any amount they want.
So if you’re even in a situation where you’re trying to evict a tenant for nonpayment, the tenant would just have to transfer you as little as $1 through Venmo. This tactic would automatically put a stop to the eviction process since it is considered an “accepted payment.”
There are other rent payment platforms such as PayRent that are far more tenant and landlord-friendly. In fact, PayRent scratches off most of the cons of using more generic payment processing platforms such as Venmo to collect rent and offers way more than just rent collection.