Credit Cards

After many nights pondering rental payment options, and many discussions on FaceBook and other platforms, I thought I would talk about the multitude of available choices and their pros and cons. The basis of this post stems from a “craigslist template” I read a few months ago. For the purposes of this post I have modified, updated, added and removed portions but it did start with their original template. Just thought I’d give them credit for that.

Checks — So, I am starting with “good old fashioned personal checks”.  Personal Checks are still the most common form of payment for a vacation rental, at least at the Jersey shore where my vacation rental is located. It has been that way since long before I ever started going to the shore myself. Most renters over 50 are probably used to paying by check and comfortable doing so. Many owners of rentals in other markets are shocked to learn that people are still paying by check. I think it is a matter of what people are used to and also the “generation” of renters in a particular market. Sure, a lot of younger people have never “written” a check, but checks are written every day, it’s just that most of them are produced online and sent by the banks.  The bottom line is, while not as instant as a credit card payment, checks still work and they cost nothing to write, send or cash. Paying by check can save a renter hundreds of dollars, and in today’s world of “booking fees”, it is nice to keep rates low. So, don’t be afraid to pay by check. That said, before sending a check to any “owner” make sure you’ve done your due diligence and are confident that the person is the true owner of the property you are renting. There are plenty of sites to verify the legitimate property owner through available public records data. Don’t go sending a check to a guy who posted an ad on Craigslist until you know he actually owns the house you want to rent! If you are a Vacation Rental owner, be wary of guests who say they are traveling for business and their company needs to send you a “company check”. Many of these are scams as it is rare for a company to pay for someone’s vacation travel (though it does happen). One of the most common check “scams” involves a “guest” sending a check for more than the rental amount and then asking for a refund of the difference. These checks are usually fake. Never “refund” money until the check clears the bank and you have confirmed it is legit.

Credit Cards — The fastest and most secure way for a guest to pay for a vacation rental is via Credit Card. If you pay by credit card you know that you have the ability through your credit card company to dispute a charge and initiate a “Charge Back” should the “owner” misrepresent himself or the property. A credit card payment offers the guest the same “protections” they get from using an online booking site like VRBO, but without all the fees they charge for their “service”. This alone may make paying by credit card a requirement for some renters but it also makes owners worry about fraudulent charges being reversed and having tenants who got a free rental on a stolen card. This is why many owners ask for a copy of the ID of the person making the charge to ensure it matches the name on the rental agreement so they know that the card isn’t stolen. Credit cards certainly bring security and convenience, but they also incur a fee to the property owner of around 3% (US based) that will likely be passed on to the renter either as an added fee or is already built into a higher rental rate. Many owners will offer a cash/check discount to avoid paying the processing fees, and in some states it is legal for owners to charge a “convenience fee” to cover the credit card costs.

eChecks or Direct Payment — Not to be confused with “bank wires” or “wire transfers”, eChecks use the same information printed on your checks to initiate a one-time withdrawal from your checking account. Some banks and payment processors offer this service for free to owners or at a lower fee than credit card processing, typically in the 0.75-1.0% range. Generally, terms like “bank wires” or “wire transfers” should be a red flag in a vacation rental transaction, at least in the US. Bank transfers are apparently more commonly used in Europe though.

Payment “Apps” — PayPal or Venmo are the most popular while Zelle is a new venture that is supported by many popular US Banks. PayPal is an almost ubiquitous online payment processor. If you’ve ever bought anything on eBay you almost certainly used PayPal. PayPal charges a fee of around 3% similar to credit cards, and while their terms prohibit directly passing on that fee to “buyers”, they allow for general “service charges” which owners may use to recoup that fee. Many owners who accept PayPal, like credit cards, have already built these fees into their rates. Venmo is a fairly new payment “process” (Venmo is also owned by PayPal) that is connected to your bank account and allows direct transfers between individuals for no charge (some accounts have transaction limits that may not be sufficient for your payment). Venmo is very popular among “younger crowds” (under 40 is younger to me). Finally there is “Zelle”.  Zelle is already integrated into many major US online banking sites and allows direct bank to bank transfers with no charge to either party.  Zelle is typically accessible right through your current online banking interface – usually under “send money” or “transfer and pay”. Just be aware that transfers via Zelle and Venmo are treated like CASH. There is no way to reverse or stop a payment once it is made. As a renter, I would not recommend using these payment methods unless you KNOW the person you are sending money to, such as if you have been renting from the same owner for years, or it is a friend or neighbor who you are paying.

Money Orders/Cashiers Checks — NEVER, ever, ever send money orders or cashiers checks to an “owner” or “manager” of a Vacation Rental Property Owner. Never. This should be a HUGE red flag and send you running.

 

So, that’s my rundown on payment options. I’ll take pretty much any of them to make it easy on my guests.  Currently my advertised rates are based on credit card payments and I promote a “pay by check discount”. For now I recommend all of my guests pay by check because it allows me to charges the lowest rate and not add any cost on top of an already large amount. If a guest wants to use PayPal or credit card I am happy to oblige as my rates already incorporate the added cost of doing so. I’ve talked to a handful of other owners in my area and they all take payment by check for the vast majority of rentals and like it that way. I suppose “if it ain’t broke don’t fix it” applies here, but times change and we need to keep up or get left behind.  So, checks are my preferred method for now, but in keeping with the times, I am set up to receive payment in whatever format my guests prefer. I’m not quite up to speed on Bitcoin….so for now we’ll have to stick to actual, regulated currency!

Created by Tim Krug

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