Many businesses already use SMS for regular communication 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 of utilising the text messaging channel involves facilitating payments via text-to-pay.

Most consumers are familiar with paying online nowadays. SMS is a great alternative payment option to cash. Once text payments are set up, they can provide a frictionless checkout experience. Furthermore, popular online publication Small Business Trends notes that 35% of customers would actually like to pay by text. However, not many businesses currently offer this payment option. If you want to charm your customers, SMS payments are well worth considering.

In this article, you will discover how SMS mobile payments work, how text-to-pay can be used to not just process but also encourage payments, plus the benefits for both customers and businesses.

How does text-to-pay 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, from promoting a particular product to sealing the deal, right up to the payment processing stage.

It's much more seamless and quicker for consumers to use the same platform to learn about a product, check the price, and pay through rather than juggling multiple devices or navigating through numerous screens.

Some of the main ways to use text-to-pay are outlined below. A trusted SMS payment provider can help your company with set-up.

1. Customers pay by text message only

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.”

Customer: “Y”

Incredibly easy, right? A bit of legwork needs to be done in advance, of course, before you can accept payments through this format. In this case, the sales agent should have already stored the customer's payment information and delivery details. They then process the payment at the back end after receiving confirmation of payment via SMS. From the customer's point of view, they've gone through an SMS payment process.

2. Customers visit a secure online payment portal

SMS-based text-to-pay services can easily be used alongside third-party eCommerce payment options such as PayPal. The text sent by the customer serves as a confirmation and redirects them to a separate payment processing company where they enter their financial information. They can also be given the option to save this information for secure payments in the future.

3. Use SMS for payment reminders or notifications

If you collect regular payments from customers, as you would if you offer a subscription service or loan product, you can issue a payment reminder text message 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, an SMS for payment request is ideal for prompting customers to initiate the payment process and/or add a payment method for recurring payments. It's good practice to have your SMS billing system include key details such as the item or services purchased, the billed amount, and a link to T&Cs, if applicable, when sending out the payment text message.

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. A payment confirmation text message will ensure transparency, provide peace of mind, and definitely boost your ratings in the customer service department. You could even include a link to a downloadable receipt within your message content, allowing for paperless SMS billing.

Payment confirmation on mobile phone

How do text payments 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. Also, facilitating customers who want to pay with SMS means there would be no unnecessary delays due to the unavailability of their choice of payment method.

  • Simple and convenient – Virtually everyone is familiar with text messaging. The process of selling and receiving 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, according to a study by Gartner. When you issue an SMS payment reminder, it will get noticed, and this should ensure most customers pay on time. A friendly payment reminder SMS also wouldn't hurt your relationship with your customer, compared to aggressive phone calls or strongly worded emails. All these factors combined could play a key role in reducing the number of late or missed payments.

  • Saves time when chasing debts – Collecting late payments via voice calls is time-consuming, and debtors often avoid answering their phones. A 'payment due' 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.

  • Contactless – When the entire payment process, from shopping and invoicing to making payments and receiving receipts, is based on text, there is no need for customers to come in for any purpose or for your reps to go to them. No additional POS hardware would be required either since there would be no need to swipe an actual, physical credit card.

  • Paperless – Suppose your customers want a text-to-pay service. You implement an SMS payment service so you can send out bills, payment links, requests, outstanding balances, and any number of other details and documents. You can text payment receipts to them too. No printouts at any stage. With the amount of paper you're going to save, payment by text is super environment-friendly.

  • 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, with the introduction of mobile payments via SMS, will reduce cart abandonment rates and boost customer satisfaction.

Happy customer opening a parcel

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.

Text-to-pay can be used in various ways, from serving payment reminders and collecting debts to providing a smooth checkout and payment experience, which 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).

Want your customers to pay by text? Messente can help you figure out how to set up SMS payments. Contact us today or register for a free account to try our business text messaging services right away.