Digital wallet payments are safer than trust accounts – here’s why

They also know that trust accounting is time-consuming, sucks up resources, and is labour-intensive. Indeed, property managers spend hours on end-of-month reconciliation and have to manually resolve incorrect references. It’s admin-heavy.

More worryingly, it’s a magnet for trust account abuse, theft, fraud, and misappropriation, while the risk of human error is high.

But some property managers have not yet discovered that there is a more secure - and increasingly popular - alternative. Today next gen agencies are opting for a secure digital direct payment solution that ensures no one other than the tenant and the owner have access to transactions. The most dynamic and fastest growing property managers are already using the automated rental payments platform Managed to boost efficiencies and slash operating costs.

Managed is a digital wallet-based payment platform designed as a structural alternative: no pooled trust account, automated disbursements, and granular visibility for every stakeholder. Instead of “one big bucket of money”, each party has their own wallet, and funds move directly between them under strict rules.

Studies show that by 2030, there could be more than six billion digital wallet users globally. Users have recognised that there is a strong case for its use. Digital wallets help agencies and other businesses reduce admin and deliver payments with speed by securely storing all payment methods in one place.

It is a safer alternative to traditional trust accounts that supports Australian fair trading compliance expectations. Managed has compliance ingrained into the platform, so agencies are compliant from day one.

How trust accounts work – and why it’s risky for your agency

Under state and territory laws (for example, the NSW Property and Stock Agents Act 2002), licensees who receive money on behalf of tenants must hold those funds in a designated trust account at an authorised deposit-taking institution, and comply with strict management and audit rules.

That model typically looks like this:

1. Tenants make an electronic funds transfer (EFT) of their rent money. This is paid via a direct electronic funds transfer (DEFT) payment, which is then processed into a trust account.

2. These rental funds are reconciled in a trust accounting software.

3. Bills and bond payments are processed from rental funds.

4. ABA files are downloaded for landlords, agencies, and tradespeople.

5. Batch payments are then uploaded to bank accounts.

6. Payments are made to the bank accounts of agencies, landlords, and tradespeople (often in batches after reconciliation).

The agency must do regular reconciliations, maintain ledgers, and submit annual trust audits to regulators such as NSW Fair Trading or their equivalent in other states.

While this structure was designed to protect consumers, in practice, it leaves agencies vulnerable by creating three major risk zones:

1. Pooled-fund “honeypot”

When millions of dollars of client funds sit in a single pool controlled by the agency, any weakness – poor controls, staff misconduct, cyber compromise – has a multiplier effect. A single bad actor or process failure can impact dozens or hundreds of clients.

A 20-year analysis of Australian real estate trust account fraud by the University of Technology Sydney and RMIT University found that between 1997 and 2017, there were 140 instances of fraud involving 171 individuals, the majority being licensed agents, while a small portion only held a certificate of registration.

This is not a historical issue, however. There have unfortunately been a number of recent cases, highlighting the continued risks of agencies holding trust accounts. For example:

• In February 2025, NSW real estate agent Maree Kylie Lane was prosecuted by NSW Fair Trading for misappropriating over $1.4 million from trust accounts. She pleaded guilty to 29 offences of being an accessory to fraudulent conversion of trust money by misappropriating 31 transfers from Parramatta’s Prestige Strata accounts to her personal bank account. She was sentenced to a two-year and 10-month intensive corrections order and 450 hours of community service.

• In May 2025, former Byron Bay real estate agent Sarah Dougan was on the run after pleading guilty to stealing $540,000 from the Belle Property Byron Bay Trust Account. She was ordered to return from the United States to appear in person for sentencing in NSW.

• In October 2025, a Western Australian real estate agency and its director were slapped with an $18,000 fine over multiple trust account audit failures. First Base Investments Pty Ltd, based in Bicton, was fined $14,000 for four breaches involving overdue trust account audits for the years 2021, 2022, and 2023. First Base Investments’ licensed director Ross Phillip Wilkinson was fined $4,000 by the tribunal for insufficient staff supervision and failing to ensure statutory compliance, while the agency was ordered to pay $2,500 in costs.

These aren’t isolated cases – they’re part of a recognised systemic pattern of trust account abuse that underscores the need for a new and secure system that will protect agencies against fraud and misappropriation.

2. Heavy manual processing

Trust accounts are admin-heavy:

• Daily banking and receipting

• Matching payments to ledgers

• Fixing reference errors and dishonours

• Month-end reconciliation of trust ledger versus bank balance

• Preparing audit packs and reports

Every manual step is both a cost and a failure point – for errors, manipulation of records, or delayed detection of anomalies.

3. Limited real-time transparency for clients

Owners and tenants usually see the results (statements, disbursements), not the live movement of funds. That opacity can make it harder for owners to spot irregularities early, reducing the deterrent effect of real-time scrutiny.

Digital wallet-based platform Managed protects agencies from fraud

Managed is a 360-degree total end-to-end property management platform without a trust account that uses a network of digital wallets to move money atomically and securely between tenants, owners, tradies, and the agency.

All of these users with a Managed profile get a wallet to facilitate their payments. Think of wallets as a fancy term for a digital bank account (like PayPal wallets or Uber Cash).

Funds can be sent into wallets, paid between wallets, and taken out of wallets to another bank account.

There is high visibility as property managers can see wallet balances for all owners, tenants, tradies, and properties.

Managed is like internet banking for investment properties. At a high level, the model works like this:

1. Each stakeholder has their own wallet (or designated account) in the platform: agency, landlord, tenant, and tradie.

2. The tenant funds their wallet to pay rent by making a payment via EFT transfer, BPAY, credit card, or debit card.

3. The Managed platform automatically splits the money. It pays multiple things – management fee for the agency, money owed to tradespersons, and rent for the landlords – into their respective wallets.

4. This money is then paid out from the wallets to the bank accounts of the agency, tradesperson, and the landlord. The landlord can choose to receive their rent in their bank account weekly, monthly, or instantly.

One of the biggest advantages is that there is no agency-controlled pooled trust account where all money sits together. Instead, the platform orchestrates directed flows between individual wallets. Each transaction is time-stamped, attributed to a specific property and party, and recorded in an immutable ledger. Disbursements happen automatically and transparently, in near real time, according to how you configure it (e.g., disburse above a certain amount of money or retain funds for a scheduled bill, etc.).

Managed replaces trust accounts with “secure digital wallets” and removes reconciliations and manual entries altogether.

Why digital wallets are safer than pooled trust accounts

Let’s compare the risk profile of pooled trust funds with a wallet-based model.

1. No single pooled pot to raid

Trust account:

• All client money is held in one (or a small number of) pooled bank account(s).

• A successful fraud or cyber breach can impact the entire pool.

Digital wallets:

• Funds are segregated logically per stakeholder, with clear ownership at each step.

• The agency never “owns” or pools client funds in a single account – it just controls the rules for how wallet-to-wallet transfers occur.

With no ability for agents or property managers to add or edit bank accounts, there is no risk of fraud. All accounts are added by the user themselves, and the details are not visible in the system. There is no requirement to hold any owner bank details on file. Funds are transacted instantly and not held at any point by the agent.

2. Fewer manual touchpoints; more embedded controls

Trust account:

• Receipting and disbursements are often driven by spreadsheets, ABA files, and manual approvals.

• Fraud cases frequently involve falsified records, unauthorised withdrawals, or misuse concealed within reconciliation processes.

Digital wallets (Managed):

• Transactions are triggered by workflow rules and digital authorisations, not ad hoc manual bank transfers.

• Role-based access and maker-checker patterns can be enforced, e.g., one person creates a bill, another approves it; payee changes can be restricted and logged.

• Because matching and reconciliation occur automatically in real time, there’s less scope for back-dating, papering over gaps, or hiding shortfalls.

The digital wallets used by Managed mitigate fraud by preventing the misallocation of tenant and owner funds and reducing the number of investigations that fair trading, consumer affairs watchdogs, and other regulatory bodies have to run.

3. Real-time visibility for owners and principals

Trust account:

• Owners typically see monthly or periodic statements; principals depend on reports and auditor feedback.

• Misuse can go undetected for months until an audit or complaint triggers scrutiny.

Digital wallets:

• Owners, tradies, and the agency can see payment status, disbursements, and balances in real time via the platform.

• Principals can monitor dashboards instead of waiting for delayed reports.

• That visibility not only deters misconduct but also allows earlier detection of anomalies.

4. Immutable audit trails

Every wallet transfer in Managed is logged with:

• Who authorised it

• Which property does it relate to

• Which wallets it debited or credited

• When it occurred

This creates a forensic-grade audit trail that is much harder to tamper with than traditional manual ledgers or exported bank statements. For regulators and auditors, it’s easier to trace the lifecycle of every dollar.

5. Operational resilience and fewer errors

Because the system enforces consistent rules:

• Over- or under-payments are caught and routed as exceptions, not buried in reconciliations.

• Supplier payments follow standardised workflows, reducing the risk of paying the wrong person or account.

• Staff training shifts to exception handling, not free-form processing, which reduces both error rates and the “creative” space that fraudsters often exploit.

How a digital wallet model still meets Fair Trading compliance expectations

Regulators like NSW Fair Trading, Consumer Affairs Victoria and their interstate peers aren’t attached to trust accounts for their own sake – they care that client money is protected, traceable and handled honestly. Trust accounts have historically been the mechanism to enforce that.

A wallet-based model can still support those outcomes, and in some respects, improve on them.

1. Trust money and “who holds it”

Many state rules say: if a licensee receives and holds money on behalf of others, it must be banked into a regulated trust account and audited.

When you use a trust-free platform like Managed, the architecture is designed so the agency does not receive or hold client funds in its own pooled account. Instead:

• Tenants pay into the platform’s wallet network.

• Funds are routed directly to owners' and tradies’ wallets, while the agency receives its management fee in its own wallet according to contractual rules.

This can change how the trust account provisions apply to your business. Many agencies using Managed have confirmed their model with their auditors and state regulators as “no trust account required” because they are not the party banking and pooling client money.

2. Record-keeping and auditability

Even if you’re not operating a traditional trust account, you still have obligations to:

• Keep accurate records of transactions

• Be able to demonstrate that client money was handled properly

• Support inspections and investigations

Managed provides digital logs, statements, and exports to help meet those obligations by providing:

• Detailed ledgers per property and client

• Time-stamped transaction histories

• Owner and tradie statements

• Exportable data for auditors and regulators

Digital wallet models drastically slash the paperwork involved in trust account audits precisely because there is no agency-controlled pooled trust account to reconcile. With Managed, the reconciliation just happens.

3. Fair trading and consumer protection outcomes

Fair trading and consumer affairs bodies focus on outcomes like:

• Clients not losing money through theft or mismanagement

• Accurate, timely statements

• Prompt refunds or compensation when issues arise

Digital wallets directly support these goals by:

• Reducing fraud and misappropriation risk by design (no pooled honeypot)

• Providing clear, timely statements for owners and tenants via the platform

• Stronger data for regulators if an investigation is ever needed

Digital rental payment platforms mitigate trust account fraud and reduce the number of investigations regulators must run, thereby strengthening the integrity of the real estate industry.

Comparison snapshot: trust account v digital wallet disbursement

Practical steps if you’re considering a move

If you’re thinking about moving from a trust account to a digital wallet–based platform:

1. Map your current flows: How does money move now? Where does it pool?

2. Understand the wallet model: Clarify, in writing, how funds move from the tenant to the owner, tradie, or agency via the platform.

3. Speak to your auditor and regulator: Share the model and get written guidance on how trust account rules apply in your case.

4. Update your procedures manual: Document roles, approvals, exception handling and reporting.

5. Educate owners and staff: Position the change as a safety and transparency upgrade, not just a software swap.

Important disclaimer: This article is general information only, based on publicly available sources about Australian trust account regulation and digital payment platforms. It is not legal, financial, or compliance advice.

• Trust account and licensing obligations differ by state and territory, and depend on how your specific payment flows are structured.

• Moving to a digital wallet or trust-free model can reduce certain risks and compliance burdens, but it does not remove your responsibilities under real estate, consumer and AML/CTF laws.

• You must seek advice from your own auditor, lawyer and relevant fair trading or consumer affairs regulator before changing how you handle client money.

To find out if Managed can help drive your rent roll growth book a discovery meeting