Should Landlords Collect Rent Online with PayPal?
by Kris
Posted on Monday August 20, 2018 at 03:32PM in General
Should landlords collect rent online with PayPal?
Using PayPal incorrectly may result in a number of problems.
PayPal has two types of accounts - a Personal Account and a Business Account.
A Landlord collecting rent should establish a business account. PayPal charges 2.9% + $.30 to receive money from a tenant. For example, if your rent is $1,000.00, then the fee will be $29.30. This fee is paid by the landlord.
Some landlords do not want to pay this fee for collecting rent with PayPal and sign-up for a personal account instead of a business account. A personal account does not have these fees. There are a number of issues using a personal account, including:
- It is against the PayPal User Agreement. The PayPal user agreement is a binding legal agreement between you and PayPal. A personal account is defined as "If you primarily need to make purchases and send money to family and friends, a personal account is probably right for you." PayPal's user agreement states: "You may not use the "send money to a friend or family member" feature of your PayPal account when you are paying for goods and services."
- Money may be held. Receiving large monthly dollar amounts on a personal account may raise red flags in the fraud or compliance areas at PayPal. PayPal's agreement states that "Risk-based holds generally remain in place for up to 21 days from the date that the payment was received into your PayPal account." It may take an extended amount of time to receive your money and to explain that you are really running a business.
- Partial Payments could stop an eviction. A tenant can pay money to your PayPal account at any time for any amount. For example, you may have overdue rent of $1,000.00, but the tenant sends you $300.00 through PayPal. Depending upon your state and court judge, accepting this partial $300.00 payment may delay eviction proceedings. PayPal does not have a way to either restrict partial amounts or to stop a payment from a specific tenant.
- What if you have a dispute with PayPal? PayPal's user agreement restricts your rights in the following ways:
- "The issue shall be resolved exclusively through final and binding arbitration, rather than in court, except that you may assert claims in small claims court, if your claims qualify as so long as the matter remains in such court and advances only on an individual basis."
- Prohibited from joining a class action
- Tracking multiple payments may be difficult. If you are receiving payments from multiple tenants and intermixing personal payments, it may be difficult to track who has paid, who hasn't paid, and to figure out and assess late fees.
- Routine tasks are not automated: Landlords are busy and PayPal doesn't automate many of the routine tasks that take up time, such as sending reminders that rent is due, reminders that rent is late, adding late and return fees, and figuring out how to split rent with roommates.
Being a landlord takes a lot of time and effort. Landlords can save time collecting rent with landlord software, like Schedule My Rent, by letting the online rent collection software automatically:
- Remind tenants every time rent is due or is late
- Collect from the tenant's bank account or with cash at any MoneyGram location
- Collect rent monthly, twice a month, or weekly
- Split rent with roommates
- Add late fees and return fees
- Restrict partial payments, if needed
- Send payment receipts
- Allow tenants to see lease terms, payment history, and schedule a payment anytime from anywhere
- Send color-coded daily e-mail summaries to landlords
How to Help Tenants Set Up Online Rent Payments: A Landlord’s Guide
Offering online rent payment options is one of the easiest ways to streamline rent collection, reduce late payments, and improve your tenant experience. But not all renters are equally tech-savvy, especially first-time renters, elderly tenants, or those unfamiliar with digital platforms.
To ensure a smooth transition, landlords should provide clear guidance on how to pay rent online and offer support where needed. Below are effective tips to help tenants get set up for secure and timely rent payments.
1. Provide Step-by-Step Payment Instructions
Create a simple, easy-to-follow guide that outlines exactly how you want your tenants to pay rent online. This online rent payment guide only needs to be written once and can be handed out or emailed to each new tenant during move-in.
Your guide should include:
The platform name (e.g., Zelle, PayPal, Schedule My Rent)
Links to the payment website or app download
Step-by-step account setup instructions
When rent is due and any associated late fees
A sample screenshot or video link for added clarity. Schedule My Rent provides videos for tenants to Collect Rent Online.
Clear instructions reduce confusion and help ensure every tenant pays correctly and on time.
2. Share Customer Support Information
Not all tenants are confident using payment apps. Make it easier by including the customer support details of the rent payment platform you use. If you're using tools like Zelle, Venmo, or dedicated rent payment software, be sure to:
List the customer service phone number
Include their official help center or FAQ page link
Mention live chat or video tutorials if available
By equipping tenants with the right resources, you empower them to troubleshoot issues independently—saving both of you time and frustration.
3. Send a Helpful Introductory Email
Once your tenant moves in, send a welcome email that includes the online rent payment setup guide and any relevant tutorials or video walk-throughs. Most digital rent platforms have user-friendly guides available on their websites—link to those in your message.
This email should:
Reinforce your preferred payment method
Include setup deadlines
Provide contact info for follow-up questions
Proactive communication at the start of a lease builds trust and reduces payment delays.
4. Support Tenants with Special Needs
If you have tenants who are elderly, disabled, or otherwise protected under fair housing laws, make sure their rent payment process is accessible. Ask if they have a trusted family member, guardian, or caregiver who can help manage payments on their behalf.
Key tips:
Reach out directly to the responsible party
Offer to walk them through setup over the phone or in person
Clarify payment due dates and methods in writing
Providing reasonable accommodation is not only helpful—it’s required under fair housing guidelines. Make sure you're supporting these tenants with dignity and clear communication.
