In a previous blog post, I addressed the growing demand from vacationers to be able to pay for their rental homes online rather than by mailing a check. To meet this demand, many homeowners realize they should provide their tenants with an online payment option but want to do so without risking security, reliability, or revenue.
What exactly are “online or digital payments”?
Before we look at different options available to you, let’s define what an online, digital, or electronic payment actually is: An electronic payment is any kind of non-cash payment that doesn’t involve a paper check. Methods of electronic payments include credit cards, debit cards and the ACH (Automated Clearing House) network, and others.
Online vs. a mobile app
Keep in mind that some payment options are provided by setting up an online account, i.e., through a website such as PayPal. Others, such as Venmo, are strictly an App, accessed only on mobile devices. Normally, of course, online accounts can be accessed through a mobile device, and in some cases they also have apps to make it easier for you.
Benefits of offering more than one option
It’s also important to note that not all vacationers are going to be familiar with, or set up to use, the same platform or app that you subscribe to. We therefore suggest that you perhaps offer at least two different options, maybe more, especially if they are free and easy to use.
Please note that we are not financial experts, and the digital payment industry is growing and changing rapidly. The goal of this post is to make you aware of some different options that allow you to accept online payments without significant risk or cost to you. But you must do a little research yourself to make sure whatever method you choose is a good fit for you and something your guests would like to use, too.
What are some current online payment options?
|Payment Options||Fee||Payment Limits||Withdrawal Limits||Accepts Credit Cards||Domestic||Intl.|
|eChecks, Bank transfers/ACH/EFTs||Free||Vary||Vary||n/a||Yes||No|
|Zelle||Free||$2,500 daily limit
$4,000 30-day limit
|Google Pay||Free (debit card)
2.9% (credit card)
|$5,000/7 day period||None||Yes||Yes||US & UK only|
|Venmo||Free (friends & family)
1.9% + $0.10 (personal business/goods and svcs.)
|PayPal||Free (debit card)
2.9% + $0.30/transaction (credit card)
|$10,000 / transaction||$500/month; more with verification||Yes||Yes||Yes|
|Amazon Payments||2.9% plus $0.30/transaction||$500/month||None||Yes||Yes||Yes|
|Wise (Formerly Transferwise)||Transfer fee: Usually, 1% of the converted amount. Plus:
Free (debit card)
2% (credit card)
|ACH: $50k/day, $250k/year
Credit: $1k/day, $4k/week
|Payoneer||Free (for Payoneer customers)
3% (credit card)
|None||Unique to each user||Yes||Yes||Yes|
eChecks, or electronic checks, are an electronic payment withdrawn from a customer’s checking account and transferred over the ACH network to the another account. They serve the same function as a physical check, but without a physical check, it’s much faster and easier, and there are no fees charged to either of you. To make a payment with an eCheck, you simply provide your tenants the following information:
- Your bank routing number
- Your bank account number (usually a checking account)
- The name on your bank account
Note: sharing this information does not put you at any security risk! It’s a one-way street.
This service is tied to some leading banks including Bank of America, Capital One, and Wells Fargo. All users need is either their bank’s mobile app, online banking, or the Zelle app in order to send and receive money. (On the Bank of America site, just click the “Transfer” tab near the top of the page.) Zelle can also take payments via email and phone, thereby avoiding having to share bank account info.
- Sending and receiving payments typically happens within minutes.
- Debit cards or checking and savings accounts can be used, but not credit cards.
For anyone reluctant to offer their banking info to a third-party app, Zelle is a good, safe alternative – and there are no fees.
As the biggest online tech player in the world, Google naturally has its own payment solution, and it’s a simple and free way to accept payments.
Advantages of Google Wallet
- Receive money from anyone. They don’t need to have the Wallet app installed, just an email address or phone number. And you just need a Google account and debit card to receive funds.
- Automatically transfers your received payments into your bank.
- Vacationers can pay through Google Wallet’s website or through a mobile app on their smartphone.
Owned by PayPal, Venmo provides a mobile app for you to request and pay money to friends and family. It’s very quick, easy, and safe to use from your smart phone. Friends and recipients of transactions can be found via phone number, Venmo username, or email. It is limited to the US only and does not have either buyer or seller protection. You can link your Venmo account to your bank account, debit card, or credit card.
While paying with a bank account or debit card is free for many transactions, effective July 20, 2021, users who receive payments that are identified by senders as for goods and services will be charged a seller transaction fee of 1.9% + $0.10. And effective August 2, 2021, the fee for instant transfers will be 1.5% per instant transfer ($0.25 minimum fee, $15 maximum fee). Credit cards incur a 3% fee for each transaction. Note: there is a social media component to Venmo, which is why it has been so popular with Millennials, but privacy settings can easily be changed to restrict who can view your transactions.
PayPal was established in 1998 and is one of the world’s largest Internet payment companies. See our previous post about PayPal.
Advantages of PayPal
- It’s been around longer than most other online financial instruments.
- It’s very widely used, so the odds are better that your tenants might already have an account and experience with using it.
- Like Venmo, it’s very secure and allows credit cards as well as debit cards, which can be more attractive to vacationers.
- Like Venmo, you do not have to divulge any of your bank account information – all the vacationer needs is your email address or mobile number to submit the payment to you.
Other things to consider
- There are no fees charged to you (technically, the “vendor”) as long as the vacationer agrees to processing the transaction as a “Friends and Family” option. This option, however, does not provide the vacationer with PayPal Purchase Protection should they wish to cancel the payment, which is one reason why vacationers choose to use a credit card in the first place. For you, on the other hand, using the “Friends and Family” option protects you as they cannot take up a dispute with PayPal or request a charge back.
- If your vacationer will not accept using the “Friends and Family” option, YOU are responsible for the 2.9% service fee for domestic payments , or a 4.4% transaction fee for international ones, plus a fixed fee based on the currency you’re receiving.
- The funds are not directly transferred to your financial institution but are held in your PayPal account. You can transfer them from there, which, of course, may take some time. Or you can leave them there and use PayPal to pay for goods or services yourself.
The Amazon Payments system isn’t just limited to buying or selling on Amazon. You can integrate the Amazon Payments system in many different ways and let people pay for services with their stored Amazon account details. Even domestic transactions require you, the recipient, to pay a transaction fee, similar to PayPal though.
Advantages of Amazon Payments
- Branding: Strong Amazon branding creates trust with your tenants.
- Payment details are already available: Due to the huge number of Amazon customers, their payment details are already stored, making payments quick and easy.
- One-click payments: Customers can order and pay for goods with one click.
Amazon Payment Fees
- Domestic payments: A flat fee of 2.9% of every transaction, plus an additional 30c per transaction.
- International payments: A flat fee of 3.9% of every transaction, plus an additional 30c per transaction.
Facebook Payments enables you to send or receive money in Messages after you add a US bank debit card or a PayPal account. Naturally, you would have to connect with your tenant as friends on Facebook first. While in Messenger, they would select you for a chat, click the icon with a “$” to pull up the Payments feature, and follow the instructions to make a payment from the debit card or PayPal account that they have set up on Facebook. If you already have a debit card or PayPal account linked, or have received money through Messenger before, the money is transferred right away to the card or account on file, but your bank or PayPal may take up to 3-5 business days to make it available to you. Facebook does not charge either party a fee for the transaction.
Transferwise is a little different from the other services listed here as their focus is entirely on international payments. They’re a great choice if you have international customers and want to keep fees down.
Advantages of Transferwise
- It lets you accept payments from clients from anywhere in the world.
- You can receive payment into your bank account within 2 – 3 days of being paid.
- It is simple, fast, and easy to use.
- All transfers are based on real-time exchange rates.
- The fees are very low (approximately 1%) and typically less than half of what you would pay to transfer money via your bank. There are no monthly fees, no setup fees, and no receiving fees – just the small charge when you convert from another currency.
- It provides much better exchange rates for foreign currencies than most other international payment providers, especially PayPal.
Payoneer is a payment platform that also has a strong focus on international transactions and payments.
Advantages of Payoneer
- Fast payments. Receive funds within minutes of getting paid.
- Send payment requests. Multiple options for invoicing, billing, and getting paid.
- Easy to make payments. If you need to send money to others, Payoneer makes it easy to send bulk payments to multiple recipients.
- Global payment services. Set up a “virtual bank account” so you can receive payments in multiple currencies. You can withdraw funds to your local bank account at any time.
- Receiving funds from another Payoneer customer is free.
- Receiving payments from your international, virtual bank account is free for many currencies and requires a 1% fee for US dollars.
- Receiving payments via a credit or debit card requires a 3% fee.
Some things to keep in mind
A general rule of thumb is that any platform that provides protection for the consumer/vacationer (e.g., the ability to cancel the payment or submit a chargeback) usually requires an extra fee – paid by you. Conversely, most of the free options outlined above do not provide much, if any, protections for vacationers. Thus, you may encounter some push back from tenants who prefer the protection.
There may be a limit to the amount you can receive in one day or one week. So you may need to receive the payments in installments.
If you do decide to provide vacationers with an online option, don’t forget to promote this advantage on your listing! Mention it in the “Additional pricing info” field at the bottom of your Calendar page and/or at the end of your Property Description.
May you receive many payments – in any way you choose!