The popularity of m-commerce sales is growing at a phenomenal speed. In the US alone, retail mobile sales hit $359.32 billion in 2021, demonstrating a 15.2% increase from the year before, and are expected to more than double by 2025, reaching $728.28 billion1.
Thus, for companies that wish to be ahead of the curve, it’s critical to create a seamless shopping experience for smartphone users. SMS payments are a simple yet effective way for businesses to leverage mobile sales opportunities - learn more about this solution in our comprehensive guide!
Text-to-Pay: How Do SMS Payments Work?
The SMS (Short Messaging Service) payment process begins when a business sends a text to the consumer who has opted in to the text-to-pay service. This message typically contains such information as:
- Due sum
- Payment deadline
- Instructions for making an instant payment
All that the customer has to do to finalize the transaction is reply with an SMS. This often entails typing and sending a code or a word specified in the merchant’s message.
The cost of the purchase is either deducted from the prepaid mobile balance or added to the monthly phone bill. Once the action is confirmed, both parties will receive the proof of payment.
SMS transactions enable users to pay for invoices, purchase goods and services, make deposits, send remittances, and beyond. Apart from its versatility, text-to-pay systems have many other benefits - find out more about them below.
Key Advantages of SMS Payment Systems
SMS payments are beneficial for both businesses and their clients. Consumers are sure to appreciate the following advantages:
- Simplicity and speed of making an SMS payment
- Convenience and security, as there is no need to enter credit card details when confirming the transactions
- The absence of the need for a bank account
- No passwords or usernames required
- Timely payment reminders
For businesses, the text-to-pay solution offers such benefits as:
- High open rate. The average open rate of an SMS message is 99%, with 97% of texts being read within 15 minutes of delivery2. In comparison, the open rate of emails across all industries is only 20.94%3.
- User-friendliness. The fewer steps the payment process consists of, the more likely the consumers are to complete the purchase. Luckily, SMS payment systems facilitate transactions in just a few taps.
- Automated reminders. SMS payment systems send out automated reminders to users to notify them about upcoming and overdue payments.
- Integration with marketing campaigns. Businesses can boost customer loyalty by sending out marketing messages and discounts via SMS to those users who signed up for text-to-pay services.
- Paperless billing. Sending out electronic messages instead of paper invoices is a cost-effective and eco-friendly approach.
As you can see, text-to-pay transactions boast a variety of positive characteristics. However, the consumers’ payment experience will ultimately depend on the quality of services delivered by the SMS payment provider you choose.
How to Select a Reliable SMS Payment Provider?
When choosing a provider of text-to-pay services for your business, look for the following features:
- PCI DSS compliance. It is essential for the SMS payment provider you select to be compliant with all 12 PCI DSS requirements for the transactions to be secure.
- Channel surfing. Unfortunately, there is never a 100% guarantee that an SMS message will go through. Good text-to-pay service providers give merchants an option to switch to other communication channels, like an email or a phone call, if the text fails to be delivered.
- Responsiveness to inquiries. A top-notch SMS payment platform will be able to recognize consumer requests other than the transaction confirmation. For instance, if the client replies with a text that reads “Representative”, the system should be able to automatically redirect them to your customer support team.
- Advanced security features. Trustworthy text-to-pay service providers only work with reliable carrier networks and implement spam filters to offer the best consumer experience.
- Designated phone number. It is also important for an SMS payment provider to assign a separate phone number to each merchant they collaborate with rather than using the same one for multiple clients.
With these factors in mind, you are sure to select an excellent service provider and achieve high customer satisfaction rates.
Bottom Line: When Is Introducing SMS Payments Worth It?
Text-to-Pay services are in high demand, offering a ton of potential to merchants. According to recent studies, 35% of customers are interested in making purchases through text messages4
, and this figure is expected to grow alongside other m-commerce payment methods.
All in all, the speed, security, and convenience of SMS transactions have the power to significantly improve the consumer experience and boost sales, making text messages an excellent additional payment channel for virtually any business.
1 - Insider Intelligence - Rise of Mcommerce: Mobile Ecommerce Shopping
2 - RedEye - SMS marketing vs. email marketing: who wins the battle for effectiveness?
3 - HubSpot - Email Open Rates By Industry
4 - Cision - Study: Small Businesses Offering Multiple Payment Options Increase Revenue by Nearly 30 Percent