Using checks to pay rent has been a traditional method for many decades. It’s been a method of payment that most landlords and property managers were comfortable with and was the norm for creating a record of payment for tenants. Like any mode of payment, checks have both its advantages and disadvantages.

Benefits of Checks:

• Ability to cancel a check, due to a clerical error or sudden circumstantial change
• Checks can be post-dated and collected ahead of time for the entire lease period
• Conveniently written at any time
• Avoids hefty processing fees for landlords, in comparison to other methods of payment such as debit or credit cards
• Less bulky to handle and safer than carrying cash

Disadvantages of Checks:

• Fraudulent issues with fake checks
• Inconvenient for tenants when required to mail or deliver checks to an off-site location, plus rising costs for postage and envelopes
• Checks are not free; expensive to order
• Inconvenient for landlords who need to travel to a financial institution to deposit the checks, unless they register for online banking to deposit by a mobile device 
• It can take several days for a check to clear, if the landlord and tenant don’t use the same financial institution
• If checks bounce due to insufficient funds, NSF fees at the bank can be costly
• Fewer options to pay – cannot use all debit or credit accounts, only checking account
• Decreasing popularity of checks with younger generations; students are often unfamiliar with how to acquire checks or how to properly write one

As technology rapidly changes, payment processes continually change. There are now many ways to pay rent, one of the most common being online.

The beginning of online payment options began in the 1990’s. In 1994, Stanford Federal Credit Union was the first financial institution to offer online Internet banking to all of its members. In 2014, online payments were seen as the most ideal way to make rent payments; although about 78% of landlords still require tenants to write checks.

The primary disadvantage of checks now relates to increasing fraudulent issues. While checks can take several days to be flagged as fraudulent, online payments can cut down on fraud altogether. In 2017, the Association for Financial Professionals, Inc. (AFP) released results of their Payments Fraud and Control Survey. According to the AFP, checks have been and continue to be the payment method most often exposed to fraudulent activity, with 31% of survey respondents reporting their organizations experienced check fraud more than 15 times in 2016.

Benefits of Online Payments:

• Increased convenience – payments made from home
• More likely to receive payments on time, due to reminders, automatic payments and rewards/incentives for paying rent punctually
• Increased transparency – real-time notifications of payment status
• Increased security
• Some services help tenant credit history by reporting to the Credit Bureau
• Instantaneous payments – no longer waiting for a check to clear or processing period

Online payments now also incorporate many different forms of personal identification and two-factor authentications practices to ensure security is being met. This, along with instantaneous payments, will make online banking the preferred method for rental payments in the near future. 

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