We know how important it is for landlords to receive rent payments quickly and reliably. That’s why Innago works to speed up payment delivery whenever possible. However, there are situations where a tenant’s bank later rejects a payment after funds have already been sent to you.
Here’s how the process works and why reversals can happen.
How Payment Holds Work
First Time Tenant Payments: 3 Business Day Hold
When a tenant makes their very first ACH payment through Innago, the payment is placed on a 3 business day hold.
This hold exists because banks are legally allowed up to three full business days to notify us if a payment fails due to issues like:
During this period, we wait to confirm that the tenant’s bank has successfully processed the payment before releasing funds.
Faster Payments After the First Successful Transaction
Once a tenant has gone through that three business day hold, we reduce the hold time to just 1 business day.
This allows landlords to receive payments faster, which is something many users prefer. In these cases, Innago is sending our own funds to you before the tenant’s bank has fully completed its verification process.
Essentially, we are advancing the payment in good faith while waiting for the tenant’s bank to finalize the transaction.
Why Reversals Happen
Sometimes, a tenant’s bank notifies us that a payment failed after we’ve already deposited the Innago funds early into your account.
When this happens, Innago never actually receives the money from the tenant’s bank, even though we already sent the funds to you.
Because of that, we must process a reversal to recover the amount that was advanced.
Please Note: You will not be able to record offline payments on a transaction that has failed and has not yet been resolved. You will need to wait until the reversal has completed, and the invoice status changes from “Fully Paid” to “Unpaid” or “Overdue”. For this reason, it’s best to have your tenant pay electronically to avoid having funds reversed from your account.
Common Questions
If the payment failed, why does the invoice still say ‘Fully Paid’?
We give your tenant some leniancy to correct their failed payment before we start the reversal. Once we receive the notice of the failed payment from the tenant’s bank, we give the tenant ~3 business days before the reversal initiates to log in and re-pay. Until the reversal completely goes through, we leave that invoice showing as fully paid on your side. Once the reversal finishes, the invoice will update to ‘Overdue.’
“But I already received the deposit. Why was it reversed?”
The deposit you received was sent from Innago funds before the tenant’s bank fully confirmed the payment. If the bank later rejects the transaction, the original payment never successfully completed.
“Does this mean Innago made a mistake?”
No. This is part of the normal ACH banking process. Banks can still return or reject payments within the allowed processing window, even after funds appear deposited.
“Why doesn’t Innago just wait longer before paying landlords?”
We choose to shorten hold times for established tenant payment histories so landlords can access funds faster. The tradeoff is that, in some cases, reversals may occur if a tenant’s bank later returns the payment.