3
min read

Disadvantages of Collecting Rent with Venmo and other cash apps

While seemingly hassle-free, cash apps have increasingly been causing issues when collecting rent. We have a solution.

Collecting rent through a popular P2P mobile app  - sounds simple enough, right?

Unfortunately, there are numerous factors to reconsider depending on your collections process:

Partial payments

Through cash apps, funds are automatically transferred and received without an acceptance of payment. This becomes a huge problem for landlords that don’t allow partial payments or landlords that have already begun the eviction process. With as little as $1 paid towards their balance, the landlord is unwillingly “accepting” rental payment through Venmo and other apps, thus delegitimizing the current eviction process which the landlord will have to begin again.   

Processing Times

While cash app transactions are technically “instant,” there still may be longer than expected processing times. This can result in a landlord thinking a payment was late, even though it was initiated the day before, causing further ambiguity and issues with tenants.

Paying the Wrong Person

This happens frequently, even amongst people who regularly exchange payments, and even amongst friends. This is no different for tenants paying their landlords, as an address, name, or phone number may be entered wrong, causing the tenant to pay the wrong person and suffer a late fee (as well as the hassle of getting their payment back). 

Fees

After years of free payment transfers, many landlords are suddenly being flagged to pay steep costs to conduct business through these apps, ranging from 1.9-3.5% depending on the app, and the classification of your business. 

With Venmo for example, landlords have been and are continuing to be forced into business accounts where they owe 1.9% per transaction, with other cash apps enforcing similar fees.

Even with just 20 residents, landlords who have not yet registered could suddenly be hit with a $190 charge to transfer funds; assuming a $10,000 monthly rent roll. This is for a standard lease with 12 monthly payments but could change drastically for landlords collecting on less frequent schedules, such as student housing landlords that collect semesterly. In a case like this, that sudden fee would come in at over $1000; not something everyone is prepared to pay when they’re used to no-cost collections. 

What is the solution?

While cash apps are great for rent collection in concept, various issues arise when put into practice. Using property management software, specifically with a mobile app for tenants is a way around this. While many tenants want online payments, they likewise want those online payments to be easily made. 

With more mobile app features for tenants and more benefits and functionality for landlords, Rentroom’s mobile app makes it as easy as possible for landlords to bridge the gap between cash apps that tenants love, and property management software that is equally beneficial to the landlord.

Improvements (for tenants)

  • Same technology as Venmo to link bank accounts (Plaid)
  • Ability to enroll in autopay
  • Ability to view balance and historical payments
  • Invoice breaking down any other fees associated with their balance before payment is made
  • Payment initiation date is indisputable
  • Unable to pay the wrong person

Improvements (for landlords)

Interested in streamlining your rent collection and giving your tenants a similar experience to Venmo?

Sign up, or book a demo with one of our account executives.

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