Skip to main content

How to Improve the Way You Accept Rent Payments Online

Learn how to improve the way you accept rent payments online by examining your current online rent payment process and implementing our 6 Do’s and Don’ts of accepting rent payments online. 

What is the best way to accept rent payments online?

Are you satisfied with the way you accept online payments? No single operational process is more important to your business than collecting rent. It impacts every aspect of property management – from cash flow to NOI and even resident satisfaction. The best way to accept rent payments online is with a system that is easy for your residents to use while eliminating manual data entry for your staff.

These days, most large property management companies have an online payment solution but not all online payment solutions are created equally. If you’re suffering from low resident utilization rates, too many fees, or bad integration it can defeat the purpose of having a payment solution at all. If you’re manually processing payments or constantly fighting chargebacks you aren’t getting the most out of your online payment solution.

It isn’t enough to simply offer online rent payments, you have to optimize your solution so your residents will want to use it. The more residents that use your system, the more your team will benefit from the added efficiency that online rent payments provide.

Here are our 6 Do’s and Don’ts to improve the way you accept rent payments online.


Want a more efficient rent collection process?

Download “The Property Manager’s Guide to Common Rent Payment Mistakes” to identify ways to improve your rent collection process & get paid faster.

Download now

1. Don’t accept fees for accepting rent payments online

Additional Fees from online rent payment providers

First and foremost, don’t pay any additional fees for your online payment system. While transaction fees are unavoidable, additional fees are not. Some payment providers charge general monthly fees, set-up fees, fees to add properties, or fees to handle chargebacks. Be sure to find one of the few providers that don’t charge anything but the processing fees your residents pay per transaction.

Transaction fees for accepting rent payments online

When it comes to the transaction processing fee, make sure you’re choosing a model that works best for your community. Some companies find that absorbing transaction costs is a tough pill to swallow. However, when you see how it impacts digital payment adoption and the efficiency that comes from it, there’s a strong case for incurred pricing models.

There are three standard pricing models for accepting rent payments online:

  1. Standard Passed: Residents pay the online rent payment processing fee.
    This model allows managers and owners to collect rent payments from residents without an added cost. The downside is, that less residents will pay rent online because they want to avoid the added fees.
  2. Standard Incurred: The property management company pays the online rent payment processing fee for 1 or more payment types on behalf of their residents.
    This model provides residents with a free and convenient way to pay rent. With this model, online rent payments typically double. It’s important to note that typically the fee that a property manager incurs is substantially lower than the fee that is passed to residents so it’s worth talking to your online payment provider about this option.
  3. Subscription ACH: The management company pays a small, monthly, per-unit fee for ACH transaction costs no matter how many residents pay online.
    If you see more than a 50% digital payment adoption rate in your community, this is the best option for you. Management companies that go this route typically see adoption rates in the 70%-90% range because residents don’t have to pay a fee when they use the system. This allows them to dramatically reduce the time and operating expense of paper payments which frees up their staff to work on more important initiatives.

2. Do tell your residents that you prefer to accept rent payments online

Do your residents know you accept rent online? And do they know that’s how you prefer them to pay? We find that whichever method new residents use to pay their first month’s rent will likely be their go-to for the entirety of their lease term. It’s important to communicate with your residents and make sure they understand all the options available to them and that you prefer digital payments!

Here are 7 ways to let residents know you prefer to accept rent payments online:

  1. Introduce digital payments during the leasing and security deposit process
  2. Take application fees digitally
  3. Inform residents that you prefer to accept rent payments online in the lease
  4. Return security deposits electronically
  5. Implement a resident rewards program for online rent payments
  6. Offer an incentive to sign up for AutoPay

Digital Rent Payments

With this infographic, explore operational efficiencies, financial benefits, and a roadmap for maximizing NOI with digital resident payments.

Remind residents when it’s time to pay rent

Automated rent reminders can help increase the number of payments you accept online and reduce late payments. This helps your renters avoid late fees and improves your cash flow. Best-in-class payment providers can link your accounting software to their rent reminder program. This integration allows the system to automatically send an email, text, or push notification (depending on preferences) to residents whose ledger shows a balance due.

At Zego, we call this feature Rent Cycle Automation. It helps you collect resident contact information and automate activation and rent reminder campaigns. Here are a few examples: 

digital payment email notifications

For maximum engagement, find a property management software with a mobile-first, community-branded app that lets you communicate with your residents via in-app messaging, SMS, and a community feed for broadcast announcements. The more features you can include in the app that you use for online rent collection, the more likely your resident is to utilize the app. Some other app features to look for are:

3. Don’t process paper payments in your office. Accept rent payments online or convert all paper payments to digital transactions

The goal of all property management companies is to achieve 100% digital payment adoption. So, to eliminate the hassle of collecting and depositing cash and paper checks, some property management companies will require all resident payments to be made online. This trend certainly helps streamline the payment collection process, but it can be illegal per certain state’s laws.

Most states require at least one free payment option for residents. In which case, some management companies decide to incur the processing fee so that paying rent online becomes the free option for their residents. Does your payment solution have that option?

If you can’t accept all rent payments online, look for solutions that convert paper payments into digital transactions. Three solutions we suggest are:

  1. Lockbox
  2. CashPay
  3. Mobile CheckScan

Lockbox Solution for Paper Checks

If you have residents that insist on paying rent with a check, we recommend a modern lockbox solution in addition to accepting rent payments online. A Lockbox solution removes paper checks from your office and frees up your on-site property managers from processing those payments. Here’s how lockbox for rent payments works:

It’s important to note that not all Lockbox providers integrate with your accounting system so it’s key to find a provider that does so you can benefit from the added efficiency.

CashPay Solution to remove cash rent payments

Similar to checks, some residents are unbanked and make their rent payments in cash or money orders. These forms of payment are dangerous to have in your office and time-consuming to process. To remove cash and money order rent payments from your office, look for a payment provider that offers a solution to convert those paper payments to digital ones. At Zego, we offer CashPay, here’s how it works:

Mobile CheckScan Solutions

Another option is offering residents a mobile check scanning feature within their community app. It’s a simple process that is easy for renters and relieves on-site associates from processing checks. The beauty of mobile check scanning solutions are that they reduce data entry errors that can lead to returned checks. Plus, they capture account information that can encourage online payments in the future. Here’s how Mobile CheckScan works:

how mobile check scan works to accept rent payments online

4. Do tailor your solution to improve your resident’s rent payment experience

During the implementation process of your rent payment system, communicate with your vendor the experience you envision for your residents. Monthly rent payments are likely the largest recurring expense in their life, so providing an easy, hassle-free payment process builds your relationship and reputation with them.

If your payment solution doesn’t currently provide the experience you want for your residents, is their engineering team willing to build a custom solution for you? Don’t settle for a cookie-cutter product, there are many providers out there that will tailor their solutions to meet your needs. Here are a few examples of some payment trends only available with flexible vendors.

Multiple payment methods to pay rent online

Pick a provider that lets you offer multiple payment options like cash, check, ACH, credit card, debit card, and PayPal. And make sure they have a way to convert all forms of paper payments into digital transactions.

Rental Credit Reporting for online rent payments

Can your residents opt-in to have their rent payments reported to the credit bureaus? Find a provider that offers credit reporting (for free), so you can empower your residents to build their credit while differentiating your property. Be sure that your payment provider’s credit reporting feature only submits positive, on-time rental payment data. This is an important distinction because, with zero downsides, it becomes a powerful incentive and draw for responsible, reliable tenants.

Extra credit if you’re able to offer a service that allows residents to report previous rent payments made through your system as well. For example, with LevelCredit Lookback, residents are able to build credit with rent payments by reporting any payments made during the previous 24 months on the same lease for a low, one-time fee.

Mobile app functionality to accept rent payments online

Community apps are a convenient way for residents to manage day-to-day aspects of apartment living. Residents use apps for every other aspect of their life, like food delivery, booking air travel, and fitness, so why not apartment living? Apps are the go-to for activities like filing a maintenance request, getting package notifications, and reserving amenities. When residents engage with these apps, they’re much more likely to pay their rent digitally, because they’re already in the app and the button to pay is one click away. Communities with a mobile app tend to see higher digital payment adoption than those without

Flexible fee structure for online rent payment methods

Some companies charge the same percentage (i.e. 3.5% of the transaction amount) to process any type of card, debit, or credit. Be sure your payment solution offers a three-tiered fee structure instead of two. More of your residents will be inclined to pay online using their debit card if there is a flat fee as opposed to a percentage of the total amount.

Flexible rent payment dates

The rules for paying rent have been set in stone for ages. Due on the first, and late on the 5th. Depending on how and when a renter gets paid, the traditional schedule is prone to cause hardship. For instance, many independent contractors or gig workers (who represent 16% of the workforce) do not get paid on regular, bi-monthly schedules

Many apartment firms are finding it beneficial to match payment schedules to income flows. Instead of mandating that the entire balance be paid on the first, some companies are letting residents pick their due date. This allows households to better manage their expenses relative to income. It also reduces late payments, and late fees, which, let’s face it, don’t bode well for the resident experience.

Flexible rent payment dates might sound like an administrative nightmare but with the right partners it doesn’t have to be. For example, with Flex, you receive rent on time and in full with while your residents are able to pay rent in installments that work best for their budgets and cash flow. And thanks to the Zego and Flex partnership, residents can sign up for Flex directly within the Zego app.

ADA Compliant rent payment methods

Can your residents call and make payments over the phone? The Americans with Disabilities Act (ADA) requires businesses to provide goods, services and programs to people with disabilities on an equal basis with the rest of the public. Offering a pay-by-phone or pay-by-text option fulfills this requirement for any blind or handicapped residents who are unable to navigate the internet.

  • What's Your Resident Experience Score?

    Take this 10-question diagnostic to find out how your Resident Experience program stacks up! At the end, you'll get a set of customized recommendations and resources to help take your score to the next level.

    happy resident using resident experience software
  • Question 1 of 11

    What's your name?

  • Question 2 of 11

    How many units do you manage?

  • Question 3 of 11

    Do you provide an online forum for residents to connect with each other and/or their neighborhood?

  • Question 4 of 11

    Are your residents able to self-serve when they have common questions? (e.g. package retrieval, guest registration, etc.)

  • Question 5 of 11

    Do you offer residents multiple payment options for rent?

  • Question 6 of 11

    Do you provide a self-serve option for residents to create and track work orders?

  • Question 7 of 11

    Do you collect feedback from residents following the completion of work orders?

  • Question 8 of 11

    Do you send resident satisfaction surveys on a regular basis?

  • Question 9 of 11

    Do you offer lease renewal incentives?

  • Question 10 of 11

    Do you have goals around resident retention and/or turnover reduction?

  • Question 11 of 11

    What's your email address?

  • Your Resident Experience Score 75/100

    Action Items

5. Don’t expose your online rent payments to chargebacks, errors, and fraud

Transaction errors and fraud are increasingly problematic during rent collection cycles. Not only do they result in lost revenue, but they also create added work for property managers. According to NAA, property managers lose an average of $17,000 per year per property due to collections. And that estimate doesn’t even account for the hours and resources spent on managing collections, reconciling accounts, and balancing books. So what can you do about it?

If you accept rent online, make sure you have rent protection services that include:

  1. Authenticating resident bank accounts
  2. Verification that there are sufficient funds in renter’s accounts to process a rent payment
  3. Support for chargeback cases

Minimize errors and returns when you accept rent payments online

Sometimes transactions are returned because a resident has entered incorrect bank account information. Fortunately, account connect services will authenticate your residents’ bank account information before they are able to submit a rent payment.

At Zego, we partner with Plaid to verify residents’ bank account information. This allows residents to link their bank accounts from their financial institution instead of manually entering the routing and account numbers. It ensures the bank account information is valid before they make a transaction and saves you and them the headache of payment errors.

Reduce insufficient fund returns with Balance Verification

Insufficient fund returns happen when residents don’t have enough money in their bank accounts to cover their rent payments. Because it takes a few days for the transaction to be returned, they create a real bottleneck for revenue. Plus, they are a hassle for on-site associates, who have to reconcile returns and chase down the delinquent payment

That’s why we advocate for putting real-time verifications in place to confirm there are sufficient funds for transactions to clear. This ensures on-time revenue and reduces manual reconciliation work. It also saves residents from being dinged with unwanted charges that come from insufficient funds. Zego’s Balance Verification performs this audit for the benefit of both parties.

how account connect and balance verification work to protect the way you accept online rent payments

Minimize loss with chargeback defense

Chargebacks cost multifamily portfolios ten of thousands of dollars each year. A chargeback is a bank-initiated, forced reversal of funds back to a consumer when they claim a transaction is fraudulent. In the property management industry, chargebacks are most often associated with application fees. However, rent payments are also a target

At Zego, our Chargeback Defense feature helps clients with chargeback avoidance, protection, and recovery for all types of payments. From rent to application fees, ACH to credit card transactions, our comprehensive solution gives our clients chargeback protection and peace of mind.

chargeback defense for accepting online rent payments

6. Do ask for help optimizing the way you accept rent payments online

You should not be in this alone. As we’ve stated, rent revenue is the lifeblood of your business. You need a partner that can help you optimize the way you accept rent payments online. Does your provider have multi-tiered levels of support to cover all your bases? Do they have a designated team for property additions? As you acquire new properties, adding them to the system should be a quick turnaround. Three days is standard, but they should give you the option to expedite to next business day if need be.

Do they have a support center to accept payments over the phone 24/7/365? Even when your office is closed, your payment provider should still be able to accept money from your residents when it’s convenient for them. Your residents will love you for giving them this flexibility.

Do they provide you with training documents, videos and guides so you can do your own research and be self-sufficient if you want? For instance, if you need to void a transaction, or search for a check adjustment, are you able to look it up yourself?

We just directed a bunch of questions at you, but where do you go when you have questions? Implementation and ongoing support are almost as important as the actual product or service itself.

So if you’re not satisfied with the way you accept rent payments online today and are looking for a change, we invite you to get a demo of Zego Pay. We’ll walk you through the system and answer any questions you might have about how it will work with your existing system.

Ready to Improve Your Digital Payment Adoption?

To learn how we can help you implement these best practices, schedule time with a Zego™ team member for a quick demo of Zego™ Pay.

Related Content