How to Set Up ACH Payments for Rent Collection

If you want a more predictable and automated way to collect rent, setting up ACH payments is one of the most reliable options available.

In this guide, we’ll walk through how to set up ACH payments for rent collection, how the process works, and what it costs.

TL;DR

• Setting up ACH payments for rent collection allows landlords to collect rent directly from a tenant’s bank account on a recurring schedule.
• To get started, you can enable ACH through your bank or use a property management platform that automates authorization, tracking, and reporting.
• ACH rent payments are secure, cost-effective, and help create more predictable cash flow with fewer late payments.

What Is ACH for Rent Payments?

ACH is an electronic network that connects all U.S. banks and allows money to move between accounts automatically.

ACH rent payments are becoming increasingly popular among landlords and tenants due to their convenience and cost-effectiveness, and for good reason.

Instead of checks, ACH is a direct deposit right from the tenant's checking account. This means a landlord can request an ACH transaction each month to cover the cost of the tenant's rent payment. After a one-time setup and authorization, payments can be automated each month.

How Does ACH Rent Collection Work?

Once a tenant authorizes an ACH payment, the transaction is submitted through their bank to the Automated Clearing House network. Payments are processed in secure batches and typically settle within 1–3 business days.

From the landlord’s perspective, the payment appears as a direct deposit complete with a digital record for tracking and reporting.

ACH transactions typically follow this flow:

1. Tenant authorizes payment
2. Payment request is initiated
3. Transaction enters the ACH network batch
4. Tenant’s bank verifies funds
5. Funds are transferred to the landlord’s account

Most ACH rent payments settle within 1–3 business days, depending on:

• Bank cutoff times
• Weekends or holidays
• Insufficient funds issues

Understanding this timeline helps landlords plan for cash flow and avoid confusion when funds don’t appear instantly.

Before You Set Up ACH Payments for Rent Collection

Before enabling ACH payments, landlords should make sure a few foundational pieces are in place:

1. Update Your Lease Agreement

Your lease should clearly state:

• Accepted payment methods
• Due dates and grace periods
• Late fee policies
• Whether autopay is required or optional

Including ACH authorization language protects you legally and prevents confusion later.

2. Verify Your Business Banking Setup

If you’re accepting rent professionally, consider:

• Using a separate business checking account
• Confirming ACH deposit capabilities
• Understanding daily deposit limits

This keeps rent income organized and simplifies tax reporting, which becomes even more important when choosing between cash vs accrual accounting methods for landlords.

3. Decide Who Covers ACH Fees

Some landlords:

• Absorb ACH fees as a business expense
• Pass them to tenants
• Waive fees when tenants enroll in autopay or rent reporting

Making this decision upfront avoids friction later.

How to Set Up ACH Payments as a Landlord

Landlords typically have two ways to accept ACH payments: working directly through a bank or using a digital payment platform.

Option 1: Through Your Bank or Credit Union

Many banks and credit unions offer ACH processing for business accounts. In this setup, tenants transfer funds directly into your commercial checking or merchant account.

This option can work well if you:

• Already have a business banking relationship
• Only need basic payment processing
• Are comfortable managing record keeping separately

Option 2: Through a Payment Platform

Property management or rent collection platforms streamline ACH processing and layer in additional functionality designed specifically for landlords. These platforms often include additional features for your rental business, including:

• Autopay enrollment
• Automated rent reminders
• Payment tracking and digital receipts
• Integration with accounting tools
• Support for multiple payment methods (ACH, credit, debit, cash)

For landlords managing multiple units, this level of automation can significantly reduce administrative time and payment friction and is a key component of online rent collection with automated payments.

Why Pay Rent with ACH?

If you're still collecting rent by check, you're likely spending more time and money than necessary. Since ACH payments allow tenants to transfer rent directly from their bank account to yours, you have a more predictable, lower-cost rent collection process for both landlords and tenants.

Some key benefits of ACH rent payments for landlords include:

• Lower processing costs: ACH is 50-70% cheaper than credit card payments. That difference becomes significant when you multiply it across an entire portfolio.
• Fewer chargebacks and disputes: Unlike credit cards, ACH payments don't carry the same risks. Compared to checks, there's also less exposure to fraud.
• Consistent, on-time payments: Recurring ACH payments allow tenants to enroll in autopay. That means fewer reminders, fewer late payments, and less administrative follow-up.
• Faster reconciliation: Funds typically settle within 1–3 business days, and digital records simplify bookkeeping compared to handling checks.

What Does This Look Like in Practice?

Let's say you manage 10 rental units at $1,200 per month. In this example below, the landlord collects $12,000 in total rent and pays approximately $10 in ACH fees—a minimal cost compared to the time savings and reduced processing risk.

For larger portfolios, the cost efficiency scales even further.

Benefits of ACH for Tenants

ACH payments are a preferred form of payment for tenants because they streamline the movement of money and help avoid late fees with autopay. Other benefits include:

• Set it and forget it: Tenants can set up automatic payments so rent is automatically deducted each month.
• Avoid late fees: Automated payments reduce the chance of missed due dates.
• No paper checks: There’s no need to buy stamps, visit the bank, or keep track of paper payments.
• Digital receipts and payment history: Tenants can log in anytime to view payment confirmations and transaction history.

Pro Tip: Waive your tenant's ACH fees every month they are enrolled in rent reporting through TenantCloud to build their credit history. A win-win for everyone.

ACH Transfer Fees: A Quick Calculation

What are the fees associated with ACH rent payments? It typically has much lower fees compared to a credit card transaction. Here are typical fee types and amounts:

Most landlords can expect the following:

• $0.25–$1.50 per transaction
• Optional monthly platform fees depending on provider
• Possible one-time setup fees

For example, if you process 20 ACH rent payments at $1 each and pay a $20 monthly fee, your total monthly cost would be around $40, significantly lower than most credit card processing costs.

Is Paying Rent via ACH Safe?

Yes, ACH is one of the safest and most reliable ways to handle recurring rent payments. The Automated Clearing House Network is highly regulated and widely used by banks, employers, and government agencies for direct deposits and bill payments.

Here's what makes them secure:

• Identity verification: Banks verify account ownership before allowing ACH withdrawals.
• Encryption: Payment data is encrypted during transmission to prevent unauthorized access.
• Fraud monitoring: Financial institutions actively monitor transactions for suspicious activity.
• Transaction traceability: Every ACH payment creates a digital record, making it easier to track and resolve disputes.

As with any online system, basic precautions, like using secure passwords and trusted platforms, add an extra layer of protection.

Common Mistakes to Avoid When Setting Up ACH Rent Payments

Even though ACH is simple, a few mistakes can create friction.

Not Collecting Proper Authorization

Landlords must receive written or digital authorization before initiating ACH withdrawals.

Entering Incorrect Routing or Account Numbers

A single digit error can delay payments or trigger failed transactions.

Not Explaining Processing Time

Tenants may expect instant transfers. Clarify that ACH can take 1–3 business days to settle.

Forgetting to Communicate Failed Payments

If a payment fails due to insufficient funds, notify tenants immediately and document the issue, as clear records make it easier if you later need to collect unpaid rent from previous tenants.

Comparing ACH vs. Other Rent Payment Options

How do ACH rent payments compare to other popular electronic payment methods? Here's an overview of the pros and cons of different options:

ACH Bank Transfers

• Pros: Process automatic monthly payments directly from your bank account at a lower processing rate. Easy to set up recurring transfers. Can connect with your property management software, allowing you to track online payments and expenses, 24/7.
• Cons: Can take several days to process.

Optimal payment choices for rentals: debit, credit, and ACH payments

• Pros: Using a debit or credit card to pay rent allows tenants to earn points on credit cards and have the funds deducted immediately from their accounts. Can be helpful for emergencies.
• Cons: Limits on payments and higher processing fees than ACH payments.

Peer-to-Peer Payment Apps

Services like Zelle, PayPal, and CashApp are largely popular right now, especially for quick transactions between friends or splitting bills.

• Pros: Convenient for sending one-off payments. Mobile-friendly experience.
• Cons: Not as user-friendly when it comes to setting up recurring payments. Little to no automation or payment tracking. Might also include transfer fees and fewer payment protections compared to ACH payments.

For landlords who want consistent, automated payments with lower fees, ACH rent payments are often the most practical option.

Related: Collect Rent Online: A Guide to Online Payment Options and how to check the rental history of prospective tenants

How to Set Up ACH Transactions in TenantCloud

Already a TenantCloud member? Setting up ACH rent payments only takes a few minutes.

Step 1: Enable ACH Payments

Landlords must first verify their account and connect a bank account inside TenantCloud. Once enabled, tenants can set up electronic payments through a secure portal.

Step 2: Access the Tenant Portal

Tenants will need to create or log in to their TenantCloud account using the landlord’s invitation. Basic information such as contact details and lease information may be required.

Step 3: Add Bank Account Details

Inside the payment portal, you can set up payments by providing your bank name, routing number, and other important financial details. Review the information for accuracy and submit. This ensures payments are pulled from the correct account.

Step 4: Authorize Online Rent Payments

Authorize the ACH transfer and, if desired, enroll in autopay for automatic monthly rent withdrawals. Once approved, payments will process according to your lease schedule.

Conclusion

Setting up ACH payments for rent collection helps create a more predictable and automated system for your rental business. While tenants get to enjoy an easy, automated process for one of their biggest bills, landlords get the peace of mind on not having to track down payments as much as other methods.

Streamline Your Rent Collection with TenantCloud

Automated ACH payments reduce late payments, simplify bookkeeping, and create a more consistent cash flow for your rental business.

With TenantCloud, rent collection integrates directly into your leases, maintenance tracking, and reporting—so your property can be managed all in one place.

If you’re ready to manage your tasks and get paid more consistently, try TenantCloud free for 14-days.

Frequently Asked Questions

What’s the cheapest way to collect rent online?

ACH bank transfers are typically the most cost-effective way to collect rent online. Compared to credit card processing fees, ACH transactions are significantly cheaper, especially when scaled across multiple units.

Can landlords require ACH payments?

In many cases, yes, landlords can include ACH payments as a lease requirement, provided local laws allow it. However, some states may require an alternative payment method, so it’s important to check local regulations.

Can rent collection software track income for taxes?

Yes. Most property management platforms automatically track rental income and categorize expenses. This simplifies reporting at tax time and reduces manual bookkeeping.

Is ACH rent payment secure?

Yes. ACH payments are processed through regulated banking networks, use encryption, and include fraud monitoring. They are widely used for payroll deposits, bill payments, and government transfers.

What’s the best hands-off rent collection option?

Before you rely on any rent collection method, make sure you run a tenant credit check to assess financial reliability.

Recurring ACH payments with autopay and automated reminders create the most hands-off system. This reduces late payments and minimizes manual follow-up.

What happens if an ACH rent payment fails?

If a tenant has insufficient funds, the transaction will be declined. Landlords may charge a returned payment fee depending on lease terms and local laws.