Venmo Rent Payments may appear like a great solution for private landlords, but look closer and you’ll see some glaring drawbacks.
Being a landlord can be a lot of work, especially if you own and manage several properties and tenants at once. It’s no wonder many landlords are turning to money transfer apps like Venmo to collect rent in a quick, easy, and paperless way. Though an app that transfers money instantly from person to person might seem like the perfect option for a landlord collecting rent from a tenant, the truth of the situation is a bit more complicated.
Venmo and similar money-transferring platforms are designed for peer-to-peer transfers, which makes them less than ideal for landlord-tenant relationships.
Drawbacks of Venmo Rent Payments for Landlords
The convenience of transferring payments through Venmo can’t be understated. However, there are several drawbacks that landlords should be aware of before using this and similar platforms to accept rent from tenants.
Business Transaction Fees
A payment that is casually exchanged between friends and family members is free on Venmo. However, Venmo rent payments are categorized as a business transaction, which means a processing fee of 1.9% plus an additional $0.10 charge.
This means that either you’re losing a small amount of your rent expectation each month or your tenant is made responsible for this extra charge, which can create sticky legal situations (especially if this expectation wasn’t made clear in your lease agreement).
No Late Fee Charging
Most landlords have an understanding with their tenants that additional fees will be incurred if the tenant is late with their rent payment.
Unlike some money transfer platforms that are designed for rent payment, Venmo has no automatic late fee options. That means more administrative work for you when it comes to keeping close track of each tenant’s payment submissions and calculating late fees yourself.
No Partial Payment Blocking
Many rent payment platforms have automatic partial payment blockers that prevent tenants from submitting anything other than their full rent amount.
This can create a complicated situation with any landlord-tenant relationship but especially if the landlord is in the process of evicting a tenant — in some states, the eviction process is halted by a landlord receiving any amount of payment from a tenant.
No Payment Canceling
Once a payment is sent via Venmo, it can’t be canceled by the sender. This means that if your tenant accidentally sends you the wrong amount, you’ll have to figure out how to get the additional balance back to them or you’ll have to be in contact to receive the remaining balance still owed.
This Venmo feature also creates problems for landlords who are in the process of evicting their tenants for the same reason as the lack of partial payment blocking.
No Option for Recurring Payments
One of the most common reasons why landlords opt for online rent payments from their tenants is the convenience of a recurring payment setting. However, Venmo doesn’t have this setting because it’s not primarily designed for business transactions.
Without safeguards in place against late payments, Venmo doesn’t offer much more convenience or protection to landlords than checks or other in-person payment options.
Instant Transfer Charges
Many landlords need to access the funds they receive from their tenants immediately in order to pay for their own business and personal expenses. However, with Venmo and other similar platforms, an instant transfer from Venmo to your checking account incurs an additional fee of 1.5% of the amount.
What Are the Alternatives?
As you can see, Venmo is not the best option for landlords to collect rent from their tenants. It simply wasn’t designed for this type of transaction. However, there are options for landlords that offer similar convenience levels to Venmo and similar platforms without the lack of safeguards.
If you’re a landlord in need of a safe and convenient way to accept rent payments online, consider a rent collection app specifically designed for landlords: PayRent.
PayRent provides not only the same ease of payment as platforms like Venmo do but also safety nets for landlords such as partial payment blockers, payment reminders, no instant transfer charges, and automatic late fees. This means that these apps are ideal for both landlord and tenant and can guard against issues before they happen.