Mobile Deposit and Rent Checks

One of the satisfying conveniences of the smartphone revolution has been the introduction of “mobile deposit” (using an app to take a picture of a check and deposit it). For landlords and property managers, mobile deposit of rent checks is a big improvement over driving to a bank branch or ATM. But, is the mobile deposit of rent checks the best way for a landlord to receive rent payments? Often there are significant drawbacks with mobile deposit that are overlooked.

The downsides of the mobile deposit of rent checks:

  1. Mobile deposit is still based on receiving a paper check – typically by USPS mail – and this can mean delays and lost checks. The dirty little secret of bank online bill payment is that it is still based on sending checks to landlords and property managers. Only the largest bill payment recipients, like utility companies, get paid electronically. This means most landlords whose tenants use bank online bill payment are still receiving checks. And, mail can get lost or delayed.
  2. Mobile deposit of rent checks often have a hold period or delay. Different banks put different “holds” on access to funds that are mobile deposited. While the first $200 must be available the next day, sometimes the delay on larger amounts can be many business days.
  3. Mobile deposit of rent checks can still bounce. If the tenant does not have enough funds by the time you deposit the check, you will likely be charged an insufficient funds fee (NSF) (often between $27 to $35). Even if the tenant had sufficient funds when the check was created, due to other withdrawals, the tenant may have insufficient funds by the time you deposit a check.

A more advanced method of collecting rent from tenants is “online rent payment“. With online rent payment, there is no paper rent check – payments go directly from a tenant’s bank account to the landlord’s bank account. The beauty of online rent payment services is that there’s no checks in the mail to get delayed or lost. Even if the landlord is on an extended vacation (everyone’s wish!), the deposit will occur.

One of the oldest and most trusted online rent payment services is ClearNow. For a small monthly fee relative to the rent collected, landlords save time, collect rent faster (in 3 business days the funds are usable), and issues with lost or delayed mail are a distant memory. A landlord can enroll with ClearNow at www.ClearNow.com.