Leveraging an Online Payment Platform to Mitigate Risk

As discussed in RealWorld 2018 sessions  The game has changed in the last decade on taking payments. Many of today’s laws govern the exchange of money from an individual or business to another were written in a walk-in business community, the days when consumers and businesses made payments directly to companies from which they purchased goods in retail locations or offices. But with the transformation of an online economy, more hands are in the picture. Federal and state transaction laws have become murkier with the arrival of technology middlemen or third-party money handlers. Accepting payments has become complex and challenging. Risks of changing money in multifamily Judy Rinearson, a partner at K&L Gates, LLP, noted the risks of accepting payments that face multifamily properties in today’s economy. Laws make it a federal crime to hold or move other people’s money without a money transmitter license. Also, accepting credit cards can be risky because consumers have 30 days to dispute charges and convenience fees associated with bank charges levied to sellers and come with privacy and security concerns. In multifamily, exchanging money can be a harried process. On the day before the last day of the month and through the next few days much of the industry’s rent money is exchanged between renters and housing providers. [Additional Reading: How to Reduce Risk by Transferring Properties to a Rental Property LLC] “It’s those seven or eight days of the month, as you can imagine, that are pretty intense with a lot of things going on,” RealPage’s Senior Vice President Financial Services Matt Davis said. Adding to the mayhem is the speed in which money is changing hands. A few years ago, it took a few days for rent checks to hit the bank. Today, with online payments, funds are transferring much more quickly. With third-party money handlers, apartments may not touch the money until it lands in their bank a...