In this day and age, almost everything that we pay for is through a debit or credit card. Being able to pay for goods and services using a card is convenient and in some cases can even be more secure. Such a reliance on credit and debit payments can cause a property manager to consider whether or not it would be a good idea to allow tenants to pay their rent with plastic as well.
Unlike most rental property owners, professional property managers are often set up to easily accept rent payments online. This allows property managers—and the owners they represent—to benefit from many aspects of card payments. That doesn’t mean however that there are no cons to accepting payments through plastic though.
Benefits of Accepting Credit and Debit Payments
1) No Checks to Cash or Bounce
The biggest problem with accepting checks for payment of rent is that sometimes they bounce. A check is a promise of payment and not actually payment itself. If a bad promise is made, the property manager and rental owner can suffer. By accepting credit card payments for rent, nothing is dependent upon the state of the renter’s bank account.
2) Speediness
Checks may come in on time, but they still require someone to drive to the bank to make the deposit. Then, there is the wait for the check to clear. Debit and credit card payments, on the other hand, go directly into the bank account. It’s easy and it’s quick.
3) Renters can Earn Points and Improve their Credit
Most tenants have a credit card that utilize some form of rewards program, such as air miles or cash back. Accepting credit card payments for rent allows renters to earn a lot of reward points everyone month.
Accepting credit card payments can also help tenants build a positive credit history.
4) Use Rent Collection Platforms
It’s hard to use online rent collection options if you are still accepting physical checks from your tenants. When a property manager like Martin Feinberg allows credit card payments, they gain the option of using online software to collect them. Such software allows tenants to pay rent through a resident portal, usually either by credit card or through their bank account. Online systems also allow renters to set up automatic payments, which mean no more late rent.
Disadvantages of Accepting Credit and Debit Payments
1) Processing Fees
Credit card companies and processing platforms usually charge a fee for every payment processed. Some online options charge 2.75% for each transaction, for example. Property managers should take that into account.
2) Credit Cards Payment Disputes
Though credit card payments can seem like a sure thing, they can be disputed. If a tenant disputes a credit card payment the payment is put on hold while the company investigates whether or not it should be honored. If a renter has a legitimate complaint, such a dispute is not guaranteed to go the property manager’s or owner’s way.
Additional Points to Consider
When property managers weigh the benefits and disadvantages of accepting debit and credit card payments, there are still a couple of things for them to consider.
- Even though credit payments go into an account quickly, it can still take a couple of days for the credit card company to release the funds. Property managers need to make sure that delay is taken into account.
- Property managers should always run a credit check on all prospective tenants to make sure that they have good credit. No matter how a tenant pays rent, knowing that they have a history of paying on time can make things a lot easier and more lucrative, both for the property manager and the rental property owner they work for.
