Getting Started with Online Rent Payments

Written on December 1, 2014 by , updated on June 9, 2015

online rent payments In many cases, rent is the only check that a tenant writes every month.

These days almost every bill is payable online, and yet 78 percent of landlords still require their tenants to pay rent via check.

Rent is often the only check that a tenant writes every month.

Online Rent Payments

In recent years, online rent payments have emerged as the ideal solution for landlords and property managers to streamline their efforts, saving them both time and money.

How Does it Work?

The basic premise is that rent money goes directly from a tenant’s bank account to yours each month. It’s quick to set up and designed to be automatic, so that you can spend more time doing the things you love, not tracking down the rent.

Almost all large apartment complexes offer online rent payment portals, but the majority of independent landlords have yet to make the switch. For many years, the costs were simply too high.

For many years, the costs were simply too high.

Now, small-asset landlords can manage all aspects of their rental units, including online rent payments, for free.

Related: How to Streamline the Leasing Process in 3 Easy Steps

The Benefits

  • Automatic, recurring rent collection
  • Convenient for both landlords and tenants
  • No more stamps, envelopes, checks, or trips to the bank
  • Money is often transferred faster than traditional checks
  • Attract higher-quality tenants with stable bank accounts
  • Built-in accounting and reporting

There are many available online rent payment solutions, but they are not all created equal. For example, only a few offer bank-level security, identity verification, and integration with other essential aspects of property management.

There are many available online rent payment solutions, but they are not all created equal.

Understanding Your Options

There are really only two types of online rent collection tools:

  1. Those that offer payment processing as part of a total property management system, and
  2. Those that don’t.

As any successful property manager knows, it’s best to have a system where all (or a majority) of your tools integrate with each other. If you have three separate tools for collecting rent, accepting applications, and ordering credit reports, you’re going to frustrate your applicants before they even sign a lease.

Having disconnected tools is a sure-fire way to shoot yourself in the foot.

There are some systems that only collect rent online, but without integration with other aspects of the landlord lifecycle, they provide only minimal value.

Let’s take a look at some actual products.

Property Management Software

All-in-one systems help managers accept applications, screen tenants, collect deposits and set up recurring rent payments while making it easy for tenants to manage and track balances among multiple roommates.

These all-in-one solutions simplify the landlord-tenant relationship while saving everyone time and money. They are the gold standard in online rent collection.

 Online Rent PaymentsOnline ApplicationsCredit ReportsCost
AppfolioMin. $200/mo
BuildiumMin. $45/mo
Rentec DirectMin. $15/mo

Basic Payment Processors

Whether paying by ACH or debit/credit cards, these online systems favor tenants and blindly transfer money with no special consideration for the lease terms, prorated rent, or move-in costs.

They often provide only minimal accounting and reporting tools and charge transaction fees that add up quickly.

 Min. Monthly CostPer Transaction
Applications & Credit ReportsCost for $6,000/rent, 4 Tenants
PayPal$0Bus / 2.9%+$0.30
Personal / Free
WilliamPaid$0up to 2.95%No$0 - $177/mo

Related: Using PayPal to Collect Rent? Try Cozy Instead.

Picking a Winner

While both options have their differentiators, opting for an all-in-one solution is the clear winner when considering the added benefits and competitive price tag.

Related: Top 5 Rental Management Tech Tools You Can’t Live Without

Beware of Transaction Fees

Any service that charges a fee based on a percentage of the transaction, will almost always be more expensive than those that charge a flat monthly fee. After all, the average rent payment is around $1,200, meaning that a 2.95% transaction fee would be $35!

I don’t consider “Online Bill Pay” through a bank to be a valid method of online rent collection because though it is completely online for the tenant, the bank still mails a physical check to the landlord. Only part of the process is handled online.

Direct bank transfers are also difficult to set up and require that the manager distribute account numbers to the tenant, which is risky and, frankly, foolish.

Making the Switch


The ideal time to switch to online rent collection is when you have new tenants about to start a new lease.

I suggest allowing the former tenants to finish out their tenancy under the previous payment method, and then require the new tenants to pay online.

In fact, I suggest requiring automatic, online rent payment as part of the lease terms, and only accepting applicants who are willing to comply with that provision. If you allow more than one payment method, you will just create more work for yourself, and risk introducing inaccuracies in your records.

Related: 7 Tips for Collecting Rent and Getting Paid On Time

You are allowed to mandate a specific method of payment without it being considered discrimination, as long as you maintain the same requirement for all applicants. Just because an applicant refuses to open a bank account doesn’t mean they are a protected class.

Further, it’s perfectly acceptable to refuse cash payments as long as you document it in the lease. In fact, any experienced property manager will tell you that cash rent payments are an invitation to disputes, fraud, and lawsuits. Cash is more trouble than it’s worth.

Ditch the Rent Checks

The days of hearing that “the check is in the mail” are over. Today, you can streamline all aspects of your rental business – making rent collection secure, automatic, traceable, and convenient – by managing the process online.

Of the many solutions available, an online property management system, rather than just a payment processor, offers the greatest utility.

Among these, Cozy is the easiest to use, and designed specifically for the independent landlord. Best of all, it’s Free!

You’ll love all the time you will save, and your tenants will thank you (seriously)!

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