Over the past decade, much of our economy has gone digital. We do our banking, shop for clothing, and even buy our toilet paper on sites designed for the online consumer. In 2018 alone, an estimated 1.8 billion people around the world purchased goods online, and that’s to the tune of roughly $2.8 trillion in sales. According to the experts, this figure is likely to grow to over $4.8 trillion by the year 2021.

The real estate market is no exception to this shift. When it comes to landlords and tenants, what was once a person-to-person arrangement, can now be a truly streamlined business. From rent collection to tenant screening and even maintenance requests, everything can be seamlessly managed online.

For many landlords, the prospect of ease and convenience in property management might seem too good to be true. They’ve heard the horror stories and think they could be next. Below, we’ll outline some of the most common and dangerous myths around online rental payments and show you why it’s important to the health of your business that you mentally bust them.

MYTH #1: Moving my business online would come at a high cost.

With the rise of the online economy, it’s becoming less and less expensive to do business digitally. While some options can be more affordable than others, it’s cheaper than it has ever been to get into the ecommerce game.

Of the potential online payment methods, credit cards generally run a bit higher than ACH payments. Fees associated with online transactions through credit card tend to hover between 2.5%-3.5%, while ACH transactions have a flat fee, that typically ranges from $0.20 - $3 or 0.5% - 1.5%. There are even services available that allow property managers to collect rental payments online with ZERO cost to the landlord.

Our best advice is to shop around. Learn about the options available, taking into consideration your clientele, size, and type of business and make a selection that works for you.

MYTH #2: Putting my tenants' personal information online is too risky.

We get it. Putting sensitive information on the internet can feel suspect. And when you, as the landlord, are requiring this of your tenants, it puts you in a new and possibly uncomfortable situation. You may feel like you are incurring an excessive amount of personal risk.

But fear not. When you contract an online entity to process these payments, they assume liability for the protection of the information they collect. They are held to national and international standards when it comes to the security they must provide to their clients.

One way that processors and other companies protect sensitive information is through encryption. Encryption takes your input information and encodes it, so that only those meant to see the original info can decipher it. This prevents online hackers from stealing your personal details like account and routing numbers, credit card numbers, and other confidential information.

In addition to encryption, processors use a whole slew of other tactics to protect your and your clients’ security including regularly scheduled system scans, expertly placed firewalls, SSL certificates, and more. This is the type of security and peace of mind you are signing up for when you partner with a payment processor, so it’s important to do your own research on what each possible contender offers.

MYTH #3: The process will be too complicated for my tenants.

Teaching tenants how to do something new is not what every landlord considers a good time. Lucky for you, making payments online is nothing new for the majority of the bill-paying public. According to a 2017 study, research shows that 56% of all bills at the time were paid online. What was once a completely manual and often arduous process of writing, mailing, and balancing checks, can now be done with a click of a button. And people are loving it!

With over half of bills today being paid digitally, there is a good chance your tenants are familiar with the process. But even if they aren’t, don’t reach for your chalkboard just yet. Most modern property management platforms are incredibly intuitive and easy to use. They also come with great support resources like chat bots or help libraries that teach your tenants how to navigate the site on their own. Class is not in session!

MYTH #4: Introducing online payments will turn off tenants who prefer to pay with cash or check.

Going digital with your payment method is not an all or nothing situation. Just because you are giving tenants a new way to pay does not mean you must discontinue the original.

This is the beauty of many property management softwares out there. They are customizable to you and the way that you do business. While the digital possibilities are endless, you have the freedom to pick and choose which options are right for you. When it comes to record-keeping, many platforms will allow you to merge the digital with the analog by manually entering offline payments into your accounting.

In truth, it is advisable to offer tenants multiple avenues for payment, as to purposefully be inclusive and not create any additional barriers for entry.

MYTH #5: Online payments are not secure.

While transaction fraud in itself is rare, that’s not to say it is nonexistent. Tenants are right to be cautious about how they move their money online. Below are a few good rules of thumb when it comes to internet safety.

• Make sure your connection is secure. Avoid public wifi when you are processing a transaction.
• Only complete transactions on trusted websites. This one is on you. As long as the payment processor you enlist is credible, this will be guaranteed.
• Use credit instead of debit. Paying with a debit card is riskier only in the sense that if fraud were to occur, it is more difficult to recover those real funds versus the credit of such.

• Consistently monitor your accounts. It’s definitely convenient to set all of your bills and payments to auto-pay; however, it does make it easier for something fraudulent to slide by undetected. Make it a habit to check your accounts regularly to prevent any funny business.

MYTH #6: My business is small and doesn’t need to be online.

It’s technically true, especially with a small business, that there’s no actual mandate that would require you to move your operations online. But when there is so much to gain from doing so, you have to ask yourself – why wouldn’t you?

Not only is online payment going to simplify your own life and work, but also that of your tenants. Whether you have longtime renters that you’re in no danger of losing, or you’re looking for that next perfect candidate, this service will be an added bonus for anyone you work with.

And with the simplicity of property management software these days, you can be configured and up and running in a matter of minutes. How could one say no to better business and happier clients in just a few clicks?

MYTH #7: The risk of bounced checks and chargebacks is greater online.

While there is always the possibility for payment issues, the probability does not grow when you move online. The chances of a check bouncing or a payment being refunded are the same online as they are in real life.

In the instance of an eCheck, or electronic payment that goes through the ACH network, if a tenant does not have sufficient funds in their account at the scheduled time of payment, the transaction will not process. Landlords and tenants alike will receive an ACH code (likely R01: Insufficient Funds) to alert them as to what’s going on. To learn more about ACH codes and what they mean, check out our article on rental payment fraud and how to avoid it. However, as long as your tenants are ready and willing to pay their rent, this shouldn’t be something you need to worry about.

Chargebacks, on the other hand, come into play when a tenant disputes a transaction made with their debit or credit card. If their claim is found to be valid, the funds will be returned to them. Again, as long as your renters have signed the lease and have agreed to the set monthly amount, this should not be a major concern.

Conclusion

The internet and rumor mill are rife with misinformation and misconceptions about the disadvantages of accepting rental payments online. But when you look at the facts, the truth is clear. Moving your business online is low risk, low cost, and high reward. Myth: busted!