Mobile Payment for the Win

In the ever-changing age of digital, nothing is safe from the iconic “disruptors” of Silicon Valley. Even the time-honored institution of exchanging physical cash for goods isn’t safe from overhaul and has gotten a major facelift over the last 10 years.

Now, for simple, everyday things like restaurant checks or utility bills people are using mobile apps specifically designed for the digital transfer of funds from one party to another. Gone are the days when you might be so lucky to find a crumpled-up fiver in your lesser-worn pants pocket. Now you will find that money sitting in your smartphone, neatly tucked into an app like Venmo or PayPal.

Seeing as how these apps have improved the daily lives of so many, it can be tempting to imagine how easy it might be to incorporate them into your own business. However, with significant downsides on the matter, their reach and service can only go so far.

The Obstacles to Rent Collection via PayPal and Venmo

While there are plenty of options on the app store for P2P (peer to peer) payment processing, let’s zero in on the two most frequently entertained for possible rent collection. Their fuss free set up and accessibility make them exceeding enticing; however, there are legitimate issues with using them in a property management capacity.

1.Legal Concerns

According to each of their respective User Agreements, utilizing a personal account for the purpose of collecting rent is in direct violation of the terms. Here’s a taste of Venmo has to say on the matter.

“Venmo may not otherwise be used to receive business, commercial or merchant transactions, meaning you CANNOT use Venmo to accept payment from (or send payment to) another user for a good or service.”

While this can be avoided by upgrading to a business account, that comes with its own set of challenges. Most notably, the additional fees associated with opting in to the service.

And don’t even think about trying to circumvent the upgrade by using your personal account. Venmo and PayPal are already two steps ahead and have gotten very good at sniffing out violations of the user agreement. They closely monitor all activity on their platform and are quick to flag anything even remotely suspicious. When the penalties go from account shutdown to legal action, it’s not worth the risk for any landlord to attempt.

2.Cost

If you do intend to properly conduct business using an authorized account for the purpose of rent collection, between the two, your better bet will be PayPal. Venmo makes things a bit more complicated with a significant barrier to entry in the form of a so-called Venmo card.

“You may only use Venmo to pay for goods or services using a Venmo card at merchants that accept the card or through mobile websites or apps that are approved to offer Venmo as a payment option.”

Considering the Venmo card hasn’t quite hit the mainstream just yet, I would imagine this would prevent many tenants from wholly accepting this method. And while PayPal is slightly less exclusive in this respect, it presents a different set of concerns.

The fee structure from a merchant’s point of view is less than fiscally desirable, charging the seller 2.9% + $0.30 on the total for each transaction. This means if you are accepting a rental amount of $1,000 for one month, $29.30 of that will be pocketed by the processor of the transaction and not by you. And that is merely for one transaction. The more renters you have, the deeper it cuts into your profits.

3.Less Control

When it comes to using PayPal or Venmo to collect rent, the users, or tenants are in the driver's seat. They initiate and complete all action, with the landlord on the receiving end. There’s also no clear channel of communication on the platforms, which makes it difficult to directly connect with your renters. Reminders, late fees, and auto payments can be difficult to navigate.

Additionally, landlords are unable to reject a payment. For any property manager who has been through or attempted the eviction process, the presents a huge problem. If a landlord accepts even the tiniest payment on rent owed, it could severely impact their ability to evict.

4. Less Protection

Should something go south and a dispute arise, it is widely known that PayPal, Venmo, and other P2P apps often favor in the interest of the user, or tenant in this case. As a result, based on their findings, the platform has the ability to freeze funds, making them inaccessible.

While PayPal does offer business service customers Purchase Protection, it comes with some super fine, super important print in regard to real estate. The protection does not apply to any transactions related to the real estate business.

Venmo offers its clients even less protection. Actually, it offers none.

“Venmo does not offer a buyer or seller a protection program for any transactions conducted using the Venmo app or Venmo.com, regardless of the nature of the payment (or charge).”

I don’t know about you, but that doesn’t sound reassuring. Especially when you are a landlord dealing with multiple tenants and multiple payments at the same time. Disputes are bound to happen, and it’s important to know that there will be fair and impartial judgement on the matter.

The Alternative in Property Management Software

PayPal and Venmo do a great job at what they are built for, but that is not rent collection. Landlords looking to optimize their business by going digital are on the right track, but these P2P platforms are not the way to go. Instead, property managers should seek out this software that’s designed specifically for them and all the tasks in their daily repertoire.

Anything from maintenance requests, lease signing, and even background checks can be found on modern property management platforms. Of course, you have rent collection capabilities, but that’s only the beginning. Real estate experts have put time and detail into creating just the kind of service and support you and your fellow landlords are looking for.

1.Less Costly

Pretty much any property management software on the market is going to be cheaper than the sum of your per-transaction fees when working with PayPal or Venmo. For example, Innago is entirely (yes), absolutely (uh-huh), 100% (you heard right) free for landlords. Again, it is free of charge and free of fees for property managers. All features of the platform are available at zero cost.

2.Designed for Rentals

Because the rental market is vastly different from other industries, it’s difficult to use a one-size-fits-all type of programming or platform. It can become difficult to translate fairly common rental policy to a rigid system not built for this type of work. Rather, when you have something tailor made for your business, things like rent proration or late fee enforcement have already been accounted for and thought through.

3.Service and Support

Some of the best software platforms on the market (Innago included) come with some of the best support. When you run into issues in your workflow, nothing is better than being able to pick up the phone and connect with a live human. Bonus points if it’s someone you already know! That is the standard experience for Innago users, who each have their own dedicated representative on call for anything you might need.

4.Simplified Reporting

Ever wished for a simple snapshot of your overall business health? Well wish no more. Property management software allows landlords to consistently monitor their dealings without poring over complicated spreadsheets, making it easier than ever to take control of your business growth.

5. Express Funds Delivery – Innago Exclusive

This is a game-changer. Most property management softwares and the Venmos and PayPals of the world will promise delivery of funds to your personal bank account within 3-5 business days. Innago can guarantee them in just one. And while some P2P processors do offer express payouts as an option, it’s going to come at a cost with an additional fee.

Advancements in mobile payment have absolutely improved the lives of many. And your business will not be the exception. But just as important as it is to make the decision to hop on that digital train, it’s equally important to do your research and make a smart choice about how you do it. The costs and risks associated with collecting rent via PayPal and Venmo is too high for any landlord to justify. Property management software can provide all the functionality these apps could dream of and more. And with zero fee, a network of support, and specialized features it’s an easy call for any landlord to make.