Why Online Rent Collection Beats Paper Checks

Posted On Sunday, 09 August 2020 05:00

For a long time now, payment problems have been one of the biggest concerns for landlords and property managers. Not only does it take time to remind tenants to pay, but it can also lead to further work when you have to calculate and then collect late payment fees. What’s the most frequent reason for not receiving a rent payment on time? Tenants forget to mail the rent check. 

There are more problems with the traditional rent payment method of a check. Aside from not remembering to mail it, there is the problem of check fraud. Reports in 2018 found that attempted check fraud reached $15.1 billion and successful check fraud $1.3 billion. In 2016, this was “just” $789 million.

A check contains personal and financial details, which makes it easy for professionals to commit fraud. Checks can be stolen in the mail, or they can bounce. All of these issues related to checks have a knock-on effect on your cash flow, and therefore your business.

Screening tenants is one way to help you to collect your rent on time. During the tenant screening process, you gather financial records of the person before renting out your property. It helps to have tenants with a good credit rating, as this shows that they regularly pay their bills on time. A complete screening will also include checking that the person meets income requirements and will provide you with references that you can check. 

You should also have an unambiguous policy that states the date, amount, and acceptable payment methods and the consequences of not paying on time.

That being said, one of the easiest ways to collect rent payments is online. Let’s look at why online payment collection is becoming more popular than checks. 

6 Reasons Why Online Rent Collection Beats Paper Checks

1. There are multiple payment methods

ACH (Automated Clearing House) is a payment method that lets a landlord withdraw rent payments from the tenant’s account—but only after the tenant has given permission. ACH allows for recurring payments, so tenants don’t have to remember due dates. Nevertheless, they do have to remember to have sufficient funds in the account. 

ACH systems can take between four and seven days to process, so it’s not always the fastest solution. Tenants can also pay via debit or credit card, PayPal, SMS Payment, and eCheck. 

2. Ease of use for the tenant

Having access to online rent payment means tenants can pay their rent in just a few clicks. As long as they have their smartphone with them, they can pay rent wherever they are. So, if they’re waiting in line, stuck in traffic, or on the commute to work, they can pay their rent on time.

3. You can see real-time payment notifications

Although it takes a few days for the rent payments to clear into your bank account, you will receive notifications as soon as the tenant has authorized the payment. This makes it easier to see the status of rental transactions across all of your properties. 

4. Security

Online payments don’t require the same sharing of financial details as a check. You may only need an email address or telephone number depending on the service provider. Online banking and payments usually have sophisticated encryption as well as two-factor authentication for heightened security.

5. Notifications and reminders

Many online payment service providers include the option to send reminders for when the rent is due. This reminder could be an email or SMS and, in some cases, will contain a link for tenants to open and pay their rent. This makes it easier for the tenant and reduces the number of late payments.

6. Streamlined property management

Software like Buildium, eRentPayment, and RentDrop offer a range of online rent collection services. Besides online rent collections, landlords can set up recurring payments, manage leases, or schedule maintenance. Some property management apps also have an array of accounting tools that allow you to gain better insight into your rental business's financial situation.


Remen Okoruwa is the co-founder of RentDrop, a free software tool that helps landlords and property managers collect rent and maintain their units. Remen has a background in the software industry and business strategy, working as product manager at HubSpot and previously serving as a management consultant with McKinsey & Company.

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