Ain’t No (Pay) Pal of Mine!

Ain’t No (Pay) Pal of Mine! thumbnail

Ain’t No (Pay) Pal of Mine!

Why you shouldn’t accept PayPal or credit card payments for rent.

Imagine this scenario: It’s a typical day at work for you and one of your longtime tenants. They have a great initial credit score, are always on time with rent and generally a very pleasant tenant. They ask you if it would be okay for them to pay rent with their credit card this month. Or maybe they’re more modern. Perhaps they’d like to instead use PayPal, a popular payment service in this day and age. Would you have any reason to refuse this tenant after the years of loyally staying at your property?

Absolutely, yes. Under no circumstances should you ever take these types of payments from a tenant, despite how valuable they may be. The costs of accepting credit cards and PayPal payments can incur fees you may not be aware of. Some of these problems include:

Interchange fees; all credit card companies charge an “interchange fee,” paid by a merchant’s bank (you) to the cardholder’s (tenant) bank. This is to compensate the issuer for the value and benefits that merchants receive when they accept electronic payments. If you’ve bought something at a gas station or small shop that charges you $0.50 to use your credit card, this is the way of the shop putting the interchange fee on the customer. For businesses, however, these are percentage based, usually around 2% or more. This is money you don’t want to pay out and credit card use places the burden of taking care of the fees on you by either accepting the fee or passing it onto your tenants. No one is happy on either end.

Potential for fraud/identity theft; it’s fairly easy for a person to steal a credit card and use it to rent an apartment. Once discovered, those tenants run. The payment from the credit card reverses due to courts siding in favor of the credit card holder. This system also goes hand-in-hand with…

Chargebacks; while these systems are appreciated as a user to help prevent fraud and unauthorized use, it can also turn into a problem for property managers collecting rent. Due to the large amount of money typically charged for rent payments, this could trigger a fraudulent alert from the issuing bank to the tenant using them and warrant dispute opportunities. If they’re being able to convince the company that they didn’t approve the charge, the charge can be reversed and the rent money that is rightfully yours could become a prize you now have to fight an uphill battle to get.

PayPal Business Accounts; PayPal is its own can of worms, but let’s start with the fact that any property manager or landlord must establish a business account, and similar to credit cards, PayPal charges 2.9% + $0.30 to receive money from a tenant. Trying to sidestep this by using a Personal/Family and Friends account is in fact against the PayPal user agreement. What’s more, a tenant can send a partial payment that, if accepted, could actually prevent any sort of eviction actions.

There are plenty of other issues with using credit cards and PayPal that you can find in our referred links below and learn more about the troubles of these payment methods. In the meantime, let tenants know what payment methods are and are NOT accepted under any circumstances.


Ramil Doronio is a content marketer by day and creative writer by night. His love of real estate and property management far exceeds his need for sleep. You can find him furiously typing on his laptop in between trips to In-N-Out.