Why I Stopped Using PayPal for Rent & Application Fees (And Why You Should Too)

Let me save you thousands of dollars and countless headaches with a true story that still makes my blood pressure spike.

Last year I accepted a $70 application fee through PayPal for a rental application in Duluth, Georgia. The applicant’s paperwork looked suspicious from the start — fake landlord references, addresses that didn’t exist, and a credit report that came back with multiple flags. After I asked for additional verification, she immediately opened a PayPal dispute claiming I “never provided the service.”

Within 48 hours PayPal refunded her the full amount — and slapped me with extra fees. I appealed with everything: the signed application, the non-refundable clause, the receipt from my screening company showing the fee was spent on her background check… none of it mattered. PayPal’s final response? “Decision is final.” Translation: they don’t care about state landlord-tenant statutes.

Two months and dozens of phone calls later, I was out the original fee plus another $15 in reversal charges. And yes, it happened again three months later with a different applicant in Michigan whose application was declined over 6 months ago.

If that sounds frustrating for a $70 application fee, imagine it happening with $2,200 of first month’s rent or a security deposit.

1. PayPal’s Buyer Protection Was Never Designed for Landlords

PayPal and Venmo are built for buying physical goods on eBay, not for recurring rent or screening fees. Their dispute system defaults to “refund the buyer” unless you can provide iron-clad proof of physical shipment (think UPS tracking numbers). A background check PDF or a signed lease doesn’t qualify in their world.

2. The Double-Fee Trap That Makes It Worse

When the tenant pays: PayPal takes ~3%. When they reverse the payment: PayPal keeps the original 3% AND charges you a second fee. You literally pay them to lose your own money.

Final Thought

Convenience is great until you’re the one eating the loss. I learned the hard way so you don’t have to. Bottom line: ditch PayPal and Venmo for anything related to your rentals. Today there are multiple landlord-friendly platforms that are completely free (or cost far less) and actually enforce fairness instead of automatically siding with the tenant. Your cash flow and peace of mind are worth the switch.

The content on this blog is for informational and educational purposes only and does not constitute professional real estate, financial, or legal advice. All investments involve risk, including the possible loss of capital. Past performance of any market or investment is not a guarantee of future results. The real estate market changes constantly, and while we strive for accuracy, we make no guarantees about the completeness or reliability of the information presented. You should always consult with a qualified professional before making any investment or financial decision.