Collecting Rent Through Mobile Payment Apps vs a Rent Payment Portal

Collecting rent is an integral part of the property management process. Electronic payment systems are increasingly popular with landlords and tenants because of their ease. However, there are lots of different types of electronic payments to choose from. 

When selecting a rent payment system, one of the questions we get the most from landlords is, Should I use a payment app or rent payment portal? 

To help answer that question, here’s a look at the difference between these two options and some tips for selecting the best electronic payment tool for your rental business. 

What Is a Rent Payment Portal? 

A rent payment portal is a secure online platform that lets tenants pay rent electronically and allows landlords to automate the entire rent collection process. It’s a platform made specifically for collecting rent and includes features like: 

• Automated rent reminders
• Autopay features
• Online rent payment tracking 

The defining characteristic of rent payment portals is that they’re focused solely on online rent collection for landlords and tenants. They’re specifically tailored to property management and created to make life easier for landlords, property managers, and tenants. 

How Do Mobile Payment Apps Work for Rent Collection? 

Rather than use a dedicated rent payment platform, some landlords opt to use third-party payment apps like PayPal, Zelle, Venmo, and Cash App. With these apps, tenants simply create an account and use it to send monthly payments to their landlord. 

It’s fast, affordable, and relatively easy to use. Tenants just need to create an account with the mobile payment app and then can use it to pay rent and other monthly charges. 

For example, with Venmo, a tenant and landlord would each create a Venmo account. When the tenant wants to pay rent each month, the tenant would just send a payment to the landlord. The landlord would receive the payment in the Venmo app and then could transfer it to a bank account. 

Key Differences Between Mobile Apps and Rent Payment Portals

While there are some similarities between payment apps and payment portals, there are also some key differences that landlords need to be aware of. 

Here are some key things that distinguish rent payment portals from mobile payment apps: 

• Landlord-specific features. Rent payment platforms are built for collecting rent and include features like autopay, rent reminders, and payment history. Cash apps are just made for transferring money and don’t have any landlord-specific features. 
• Unparalleled security. Rent payment portals are intended for business use and offer the highest security and fraud protection to protect landlords and tenants. Portals are the best way to ensure secure rent payments. 
• Advanced payment tracking. Rent payment tracking makes it easy for landlords to document payments, review payment history, and schedule future payments. Good documentation makes it easier for landlords at tax time or when issues arise with a tenant. 
• Scalability. Online portals make it easy for landlords to add properties and track payments across an entire portfolio of properties. Automated reminders and payment notifications are key landlord tools for tracking and scaling a business. 
• Improved landlord-tenant communication. Payment portals facilitate good landlord-tenant communication through rent payment reminders, late rent notifications, and documentation of rent payments. The tools increase communication and transparency and minimize confusion and disputes. 
• Increased setup time. Payment portals involve more front end work for landlords. With a cash app, both parties just download the app and can send money. With a payment portal, landlords have to spend more time setting up their property and scheduling payments. However, after this initial setup, the entire process is automated. 

Benefits of Using a Rent Payment Portal 

While it might seem easy to use a mobile payment app for online rent collection, there are some key benefits to using a rent payment portal instead: 

• Convenience. All tenants need is a mobile device or computer to pay rent from anywhere. Rent is automatically deposited in the landlord’s account. There’s no confusion about amounts or when rent is due. It means increased tenant convenience and increased efficiency for landlords. 
• Automation. With a payment portal, every step of the rent collection process is automated. Tenants receive rent reminders every month, tenants can see upcoming payments and the amount due, tenants can schedule autopayments, and rent is automatically deposited in the landlord’s account. 
• Documentation. With a rent collection system, landlords and tenants get documentation of all past, current, and future payments. This is vital for annual bookkeeping and dealing with any payment disputes. 
• Fewer late payments. With automated reminders and the option for scheduling autopayments, there are fewer late payments and fewer missed payments. This means increased cash flow for landlords, increased consistency, and improved landlord-tenant relationships. 
• Security. Rent payment systems offer the most advanced security features and vigorous fraud protection. This helps to ensure secure rent payments and prevents losses due to fraud or theft. 
• Attract and retain quality tenants. Effective digital rent solutions help attract and retain the quality tenants who are looking for professional and user-friendly property management systems. 

Risks of Collecting Rent Through Cash Apps Like Venmo, PayPal, Cash App, and Zelle

If you’re considering using a payment app instead of an online rent collection system, there are a few risks you need to be aware of. 

•  Landlords can’t control the payment amount. This means tenants can send rental payments online at any value. This creates confusion with recordkeeping. Plus, partial payments can be a major problem if a tenant falls behind on rent. Landlords who are dealing with unpaid rent and potential eviction proceedings need to be able to block partial payments. 
• Mobile payment apps offer no payment protection. If payment is sent to the wrong person or there are disputes, there is no recourse. For example, if you use Venmo and your tenant accidentally sends the payment to a different user, there is no way to get that payment back. Additionally, in the case of disputes, rulings are generally made in favor of the person who initiated the payment. 
• There are substantial fees for using cash apps for business purposes. This ranges from 2-3%, depending on the app. 
• Mobile apps lack key features that landlords and tenants want for rent collection – for example, recurring bills, automated reminders, payment documentation, and autopay. These apps are focused on personal use, not business use. As a result, they lack the key features landlords need to run their rental business smoothly. 

How to Encourage Tenants to Adopt Online Rent Payments 

Online rent collection offers some clear benefits for landlords and tenants, but some tenants are resistant to using an electronic tool. It’s not good for the landlord-tenant relationship to force one rent payment method, but there are ways landlords can encourage tenants to make this shift. 

1. Clearly communicate the benefits of digital rent solutions – including tenant convenience, security, flexibility, scheduling features, and reminders. 
2. Provide tenants with clear instructions for setting up rental payments online – including a step-by-step guide or video tutorial. 
3. Provide ongoing support for tenants, ideally through multiple channels – e.g., online, chat feature, videos, and tutorials. 
4. Offer incentives for using the system. This can include a one time rent credit or a small monthly discount. 
5. Integrate rent payments with other property management tools. This makes it easier for tenants because they only have one system to learn. Plus, it means they have all the information they need in one place. 

Small steps to encourage tenants to use online rent portals is often all it takes for tenants to adopt these systems. Once you get the system set up, it will lead to ongoing benefits for both parties. 

Set Up Online Rent Payments in Minutes 

It only takes a few minutes to create an account in our ezRentPayments portal. We’ll guide your tenants through setting up their account and make it easy for you to start collecting rent electronically. 

Plus, all of our pro members get access to our rent payments system with no transaction fees. This is a landlord tool every DIY property manager needs. 

Create an account today to make rent collection easier than ever.

Emily Koelsch, ezLandlordForms Contributing Writer

Emily Koelsch is a freelance writer and blogger, who primarily writes about business, real estate, and technology.