Paying your rent online is easier and more available than ever. As mobile wallets are on the rise, using a platform such as PayPal to pay rent certainly sounds tempting. It’s easy to set up, and you can pay with your credit card. Additionally, if you want to make a payment, all you need is the recipient’s email or phone number. Sounds convenient, right?
Well, it’s not that simple. Many people suggest staying away from paying rent via PayPal at any cost. As much as online payments sound great, there are many factors you need to consider before using a particular platform. So, in today’s article, we’re going to talk about why you shouldn’t use PayPal to pay rent. Let’s scroll!
In a nutshell, according to the User Agreement and Terms and Conditions of PayPal, real estate transactions are not allowed on the platform. Since rent falls under real estate, paying it via PayPal is practically forbidden. However, if your landlord has a business account, you might be able to execute a transaction. Still, there is another catch!
Business accounts on PayPal come with additional fees for landlords (we explain this in the Additional fees section). That’s why many landlords try to convince their tenants to use personal accounts for rent transactions to bypass this rule. If your landlord is doing this, you need to stop them. Here is why!
Even though there is an option for making a business account on PayPal, rent payments are prone to raising suspicion. A sum of money greater than numerous personal transactions, made in the exact same amount and at the same time each month, isn’t typical for PayPal. Other than the apparent risk of PayPal suspending your account, engaging in any rent payment that may be considered unlawful is ill-advised. It can result in an additional expense in the form of a $400 fee.
We already mentioned some extra fees that certain services on PayPal hold. Let’s elaborate a little. PayPal doesn’t impose fees when you pay directly from your bank account, but it does charge 2.9 percent when you pay with a debit or credit card. This affects you and your landlord when collecting rent. Unfortunately, only transactions between friends and family are eligible for free transactions. That is why PayPal can shut down your account if they catch you transferring the rent to your landlord on their personal account. No one likes additional fees, so if you’re looking for reasons you shouldn’t be using PayPal to pay rent, this is one of the crucial ones!
Limited to no protection
Buyers and sellers can benefit from Purchase Protection, included in the fee for business accounts. PayPal specifies that it will not cover any real estate-related acquisition, including paying rent. It practically means there is no room for mistakes.
If you accidentally send rent money to the wrong account, there are two possible situations. The first one involves a lot of legal documentation and a time-consuming process of getting back your money. The second situation, also the more likely one, is that you’ll lose that money forever. Since PayPal is in no obligation to help you in this situation, you probably won’t have any chance of getting back your money. That is why you shouldn’t be using PayPal to pay rent.
Another one of the reasons why you shouldn’t be using PayPal to pay rent is the amount of time it takes to process payments. It takes a few days for funds to reach the receiving account. Many landlords won’t like this as they won’t receive rent on a due date. It can result in them sending you a PayPal request for a rent payment a few days before the agreed-upon due date. If you can’t make a deadline or miss the deadline for whatever reason, it can cause some issues between you and the landlord.
In addition, if you’re prone to forgetting things and need to be reminded to pay rent, you’re out of your luck with PayPal once again. This platform sends only notifications for overdue payments but not payment reminders. In addition, there is no option for making auto payments on PayPal.
Furthermore, PayPal offers an Instant Transfer option. However, this service has a fee as well. This platform charges a 1% fee if you want instant access to your funds. Again – not ideal.
Solutions for online rent payments
PayPal is far from the ideal online platform for paying rent. You as a tenant must realize that this type of transaction needs to be transparent, legal, and free for both parties – you and your landlord (or property manager). That’s why you should talk about your payment options with the landlord at the very beginning. Some landlords accept cash or check only. However, if yours is open to online transactions, you should find a platform that works for both of you—the one without costly fees and restrictions for this type of transaction, but with real estate-friendly features. RentRedi, for example, enables tenants to pay with Cash, Card, or ACH.
Know the rent collection process
Once you find the perfect rental and talk about your stay and payment options with the landlord or property manager, you should start planning the moving process and ensure you’re aware of the rent collection process. You’ll want everything to go trouble-free, whether that is coordinating with professionals to move your belongings or knowing the rental process your landlord has set up.
After listing all the reasons why you shouldn’t use PayPal to pay rent, it’s pretty clear that the cons of this platform for this type of transaction are massive. You can both lose your money and get in a lot of trouble. Therefore, once you learn about these drawbacks, any benefits seem kind of irrelevant. That’s why it’s better to rely on good old check payments or find an online platform that’s better suited for real estate transactions.