Many businesses already use SMS to communicate with customers because it’s quick, effective and affordable. And even though SMS technology is a few decades old, it’s constantly evolving. One of the newest ways to mass texting is to take payments.
Most consumers are familiar with paying online nowadays. SMS is a great alternative payment option because once it’s set up, it can provide a frictionless checkout experience. Furthermore, 35% of customers would actually like to pay by text. However, not many businesses currently offer this payment option. If you want to please your customers, SMS payments are well worth considering.
In this article, discover how SMS payments work, how texts can be used to process and encourage payments, plus the benefits for both customers and businesses.
How does payment by text work?
SMS is a powerful marketing tool, helping to attract prospects, keep existing customers engaged and land more sales. Typically, you’d divert subscribers from your text message to your website for them to browse products and then (hopefully) checkout. But with SMS payments, you can use text messaging for the entire process – promoting a particular product, sealing the deal and then taking payment.
It’s much more seamless and quicker for consumers to use the same platform to learn about a product, check the price, and pay, instead of navigating numerous screens. Some of the main ways to use SMS for collecting payments are outlined below.
1. Customers pay entirely through SMS
SMS can be used as a standalone payment method where the customer sends a simple text response to confirm payment. For example:
Sales agent: “Our fabulous new hair styler is the perfect Christmas gift and costs just $59.99. Would you like to purchase? Text Y to confirm.”
Incredibly easy, right? A bit of legwork needs to be done in advance, of course. In this case, the sales agent has already stored the customer’s payment information and delivery details. They then process the payment at the back end after receiving confirmation. From the customer’s point of view, they’ve gone through an SMS payment process.
2. Customers visit a secure online payment portal
SMS can easily be used alongside third-party e-commerce payment options such as PayPal. The text message serves as a confirmation and redirects the customer to a separate payment processor where they enter their financial information and perhaps save it for future use.
3. Use SMS as a payment reminder or notification
If you collect regular payments from customers, as you would if you offer a subscription service or loan product, you can use SMS to issue payment reminders on or just before the due date. For customers who’ve defaulted on their accounts, check out our helpful SMS debt collection templates.
For first-time transactions, SMS is ideal for prompting customers to initiate the payment process and/or add a payment method for recurring payments. It’s good practice to include key details such as the item or services purchased, the billed amount and a link to T&Cs if applicable.
4. Use text messages to confirm payment receipt
However you decide to use text payments, always send a confirmation message to let customers know their payment has been processed. This ensures transparency, provides peace of mind and contributes to excellent customer service. You could even include a link to a downloadable receipt within your message content (allowing for paperless billing).
How text message payments can benefit businesses
SMS payments only require the customer to use their mobile phone (which they’ll probably keep with them throughout the day). No internet connection is needed for text messages to be sent or received, as SMS relies on cellular networks. Here are some other advantages:
Quick and efficient for customers – this means you’re more likely to get paid faster.
Simple and convenient – virtually everyone is familiar with text messaging. The process of selling and taking payments becomes a user-friendly conversational process, which is more meaningful and personalised for customers.
Timely payments – text messages have a great deal of impact – 98% are opened, and almost half are responded to. When you issue an SMS payment reminder, it will get noticed, and this should ensure most customers pay on time.
Saves time when chasing debts – collecting late payments via voice calls is time-consuming, and debtors often avoid answering their phones. A text message is a less intrusive yet highly effective way to collect outstanding debts and saves agents’ time as they won’t have to make as many calls.
- Improves the customer experience – text payment services allow for a more seamless experience, especially if customers can simply reply to a text message to confirm their payment. Many purchases get abandoned at checkout if the process is glitchy, so making it as easy as possible will reduce cart abandonment and boost customer satisfaction.
Make online transactions simple with SMS payments
The customer journey has multiple touchpoints, one of them being the checkout process. Consumers are familiar with online payment options, and an increasing number would like to pay by SMS should the opportunity be presented to them.
SMS mobile payments can be used in various ways, from serving payment reminders and collecting debts to providing a frictionless checkout (the latter can hugely enhance the customer experience).
An SMS payment gateway offers several benefits for businesses too. It encourages payments to be made in a timely fashion, thus improving cash flow – and can also help boost agent productivity (especially if texts are used to chase payments).