- SMS Payments enables customers to make payments through text messages.
- SMS payments can help businesses receive payments more quickly and reduce the chances of customers missing important payments.
- SMS payments are highly secure ways to engage in commercial transactions.
- This article is for small business owners interested in accepting SMS payments.
Check it out: One day, out of nowhere, you get a text saying you're months behind on one of your monthly payments. It comes as a shock to you. Haven't you seen emails reminding you of upcoming payments? Well, here's the thing – with most people's email inboxes becoming increasingly cluttered, payment emails are often missed. Text-to-pay — or SMS payments — helps to address this problem, and your business can harness its power, too.
What is text-to-pay?
Text-to-pay is the act of securing customer payments via text messaging. This differs from mobile credit card processing platforms — such as those in our review of Square. Instead, you can think of it more as a PayPal alternative.
Many text-to-pay platforms reside only in the customer's text inbox. Others, however, direct the customer to a URL to facilitate payment. In any case, the 160-character limit on SMS messages keeps things short, which customers appreciate.
How do SMS payments work?
The SMS payment process begins with your business sending a message to customers who have opted for text-to-pay. This text may contain a customer's outstanding balance, a due date or overdue reminder, an immediate payment option, or some combination of the three. If the customer pays via text, both parties will receive proof of payment. Learn more about what to expect in the near future of mobile payment systems with our reviews of the best credit card processors.
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You can integrate your SMS payment platform with your Customer Relationship Management (CRM) software to automate it. This way, you can start creating custom workflows through the software. For example, “On the first day of the month, remind the customer to pay.” Alternatively, your customer service representatives can generate invoices and text clients directly for real-time conversation and payment.
Pros and Cons of SMS Payment Solutions
SMS payment solutions can benefit both your business and your customers.
SMS Payment Pros for Businesses
Here are some of the benefits for your business to billing clients via text message.
did you know? Text messages have about 10% higher read rates than emails.
- Quick Payment: Many SMS payment solutions facilitate payment with just a click or two or a short text response. This setup eliminates the hassle of customers having to navigate through confusing interfaces, making payments more likely.
- Instant Customer Verification: Theoretically, anyone login to an account with a username or password could be a hacker. There is little chance that the person opening the link from a text message is someone other than the person associated with the phone number. This structure means that you will not have to verify customer information before payment.
- Automatic notification of upcoming or overdue payments: SMS payment solutions automate payment reminder notifications. Plus, since texts reach almost all customers, you can rest assured that customers are seeing your reminders.
- Integration with customer loyalty and marketing initiatives: SMS payments go hand in hand with marketing and loyalty initiatives. Consider offering a discount if the customer opts for SMS payment.
- Paperless Billing: The production of one sheet of non-recyclable paper produces 60 grams of carbon dioxide emissions. Running your billing process via text instead of paper eliminates this emissions burden and reduces your company's carbon footprint.
- Less human error: When you receive your customers' payment information, in some cases you will need to manually add it to your credit card processing system or other payment platform. Doing so may result in manual errors that delay payment processing. SMS Payments lets you copy and paste the payment information of the customers in easy-to-use formats, thereby eliminating this error.
- customer satisfaction: Emails can get buried, and personal emails requesting payment can upset customers. Text messages take both of these unpleasantness out of your customers' lives. Instead, your customers receive direct messages.
SMS Payments for Businesses Cons
There are a few drawbacks here for your company for billing via text messages.
- Cost: Like any small business technology, SMS payment platforms are not free. However, many experts are of the view that SMS payment platforms have very high charges and in some cases there is a lack of transparency in the pricing structure. You can combat this shortcoming by asking potential SMS payment vendors to provide all of their pricing and fee terms in plain writing before signing up. Learn what is included in a credit card processing agreement.
- the protection: Some experts argue that SMS payments are not secure enough, while others claim the opposite. In any case, the existence of these concerns may discourage customers from paying via SMS, and this does not benefit your business. We'll get into the SMS payment security debate later in this article.
- Likely to annoy customers: For all the convenience and simplicity of SMS payments, most people can't separate text with email at work and personal inboxes. Some customers may find SMS payment messages intrusive. This is absolutely the wrong note to strike with its customers, although many experts say that patrons responding negatively to SMS payment messages are rare.
SMS Payment Pros for Customers
These are just some of the advantages for your customers to pay bills by text message.
- User friendly way: Perhaps a customer with an overdue payment is lagging behind because they don't understand how to navigate your payment website. Maybe they have the will to pay, but not the information. SMS payments solve this problem. They facilitate customer payments in just a few clicks or even a short text response.
- One-time entry of payment information: With SMS Payments, your customers will not need to enter their credit card information every time they pay you. After their first SMS payment, their information will be entered automatically for future use. There's no need to enter or verify information – one click puts it all in the right boxes.
- No username or password: SMS payments are possible without a login, so they don't add much chaos to the Rolodex login to your customers' account.
- Less likely to miss: Since people rarely miss texts, SMS payments are a great way for customers to make sure they don't miss your invoice and end up overdue.
SMS Payment Cons for Customers
These are just some of the potential drawbacks for customers who pay via text message.
- This may sound unusual. Chances are your customers are used to receiving payment reminders by email or postal mail. SMS payments, a relatively new payment method, can seem unusual enough to make customers seem untrustworthy or illegitimate.
- It can feel intrusive. Since most people don't have more than one text-enabled phone number, there's no division between business and personal text. As a result, SMS payment messages can feel intrusive when they appear on individual phones. This can result in customers being angry with your company instead of loyal.
- It may not feel safe. Customers often access email and websites through password-protected Internet networks. The cellular networks through which SMS messages are sent lack this password protection. Therefore some customers may lack the security features required when paying businesses in SMS Payments. However, many experts believe that SMS payments are indeed secure.
Are SMS payments secure?
While much debate exists about SMS payments and whether they are secure, your customers can rest assured that their text message payments are safe from potential thieves. This is because of how SMS payments work.
Let's say you're sending people to a website for payment and request that they enter their credit card details without the need for a Wi-Fi connection. There is a common belief that using Wi-Fi for LTE data lowers cyber security barriers. However, 4G LTE networks encrypt all data, making them just as secure as Wi-Fi. This fact reduces the misconception that SMS payments are not secure.
FYI: The notion that phone data networks are less secure than Wi-Fi is a myth, making this distinction irrelevant for SMS payment security concerns.
Additionally, if you already have the customer's payment information on file and only a short text is required from the customer to trigger the payment, SMS payment is extremely secure. You will not share information about the Customer's payment details or the information they have purchased. You'll be asked for a one-word text, perhaps just “yes” or “confirm” to automate the payment using your stored information. This process keeps sensitive information completely away from the SMS network.
What to Look for in an SMS Payment Provider
When choosing the right SMS payment provider for your business, look for these features.
- PCI Compliance: A trusted SMS payment vendor will fulfill all the 12 PCI DSS requirements. This way, any information your customers send you to facilitate payment is protected.
- Storage of payment data: Most SMS payment vendors will store customers' credit card information, so you don't need to keep inputting data into the system. However, not all platforms include this feature.
- channel surfing: Despite all the benefits of SMS payments, messages are never guaranteed to go through. Hence a good SMS payment platform will let you shift to other channels if your texts fail. Find platforms that you can switch to by voice or email if needed.
- automatic response: Your SMS payment platform should allow your customers to respond with a few short phrases to initiate action on your behalf. For example, the text “Representative” will automatically connect the patron to someone on your customer service team.
- Exclusive text-to-pay tools: A reliable SMS payment provider will work with a strong carrier network, spam filters and volume caps. This way, your business messages are more likely to reach your customers.
- Dedicated Number: A trusted SMS payment company will provide each of its customers with a unique texting phone number for them. Shared numbers are a red flag. You need to give your customer all your attention – if not, you won't get their Pay attention next time.
Keep these factors in mind to choose the best SMS payment provider for both your business and your customers.