4 Rent Payment Options to Accept and 4 to Avoid

Not all forms of rent payment are equal. As a landlord, you want to choose payment options that are easy to document and that allow you to receive the funds quickly. Here are eight forms of rent payment to consider, including the four payment options to accept and the four you will likely want to avoid.

4 Rent Payment Options to Accept

Can a landlord dictate how you pay rent? Generally, landlords have the right to decide the forms of rent payment they will accept from their tenants—though there are some restrictions. For example, some states say you can’t only allow online payments.

The following four payment options are the best bets for landlords. These methods are easy to verify and are more secure.

1. Certified Check: A certified check is issued by a bank. It is proof that the tenant’s bank account has the necessary funds available at the time the check is written. However, there is no guarantee that those funds will still be in the account when you go to actually deposit the check. Therefore, this form of payment is more secure than a personal check, but not as secure as a cashier’s check.
2. Cashier’s Check: A cashier’s check is similar to a money order. However, there is a larger fee associated with a cashier’s check and they are only issued by a bank where the tenant has an account. The bank will withdraw the funds from the tenant’s bank account and will then serve as guarantor of the amount that the cashier’s check is for. Since the bank is guaranteeing this amount, you do not have to worry about the funds being unavailable when you try to cash the check.
3. Money Order: Money orders are available at a bank, local post office, or another convenience store for a small fee. The tenant had to transfer funds in order to get the money order, so it is like receiving a gift card for rent. For example, the tenant wants a money order for $1,000, so they give the post office $1,000 in cash. The post office then gives the tenant the money order for $1,000, which they give to you. 
4. Online: Online payments that do not require you to provide any of your personal banking information to a tenant are a good option. It is quick, the funds usually transfer immediately or within a day or two, and it requires little effort. There are many online rental payment sites such as ERentPayment, RentPayment’s RentMatic application, and RentMerchant. P2P online payment platforms, like Venmo or Zelle, are also smart choices as they allow you to pay your landlord by using their email or phone number.

4 Rent Payment Options to Avoid

Landlords can also refuse to accept certain forms of rent payment from these tenants. These forms can be hard to record or could even lead to fraud. The four payment options to avoid include:

1. Cash: Do not allow your tenants to pay their rent in cash as it is difficult to document and easy to dispute. The tenant can claim they have given you the full rent amount in cash, but you may realize they are $20 short when you actually count the money. If the full rental amount is not in the envelope, it will be a he said vs. she said dispute with no way to prove how much cash was actually in the envelope.
2. Credit Cards: Do not allow your tenants to pay rent using a credit card. First, you will usually have to pay some sort of transaction fee to the credit card company. Secondly, the tenant always has the opportunity to report this charge to their credit card company as fraudulent, leaving you with no payment until the situation is rectified, hopefully in your favor.
3. Direct Deposit Into Your Banking Account: Do not allow tenants to directly deposit their monthly rent into your banking account because this involves you having to give them your account number and your routing number. If they are able to put money into the account using this information, they are also able to take money out of the account using this information. While most people are honest and would not commit this type of crime, it is not worth the risk.
4. Personal Check: With personal checks, there is no way to verify if the check is real or if the funds are available until you try to deposit the check and it does not actually clear. Once your tenant has established a payment history using a more secure method, you may decide to accept personal checks since they have built up the trust level.