Skip to content

How Do SMS Payments Work?

Written by

Last editedMay 20232 min read

For customers on the go, SMS payments offer a fast, easy way to pay for goods and services. For businesses, SMS payment processing opens the door to serving customers who prefer to pay with their mobile phone. But how does paying by text work, and is an SMS payment system right for your business? Here’s how to get started.

What is an SMS payment?

An SMS (Short Messaging Service) payment refers to any payment taken using an SMS text message. The business might send a text message to the customer with a link to click through for payment processing. In many cases, customers can complete a purchase via SMS by texting back a response. A third-party mobile payment provider clears the transaction with this response code, either deducting it from a prepaid balance or adding the cost to the customer’s regular phone bill.

How to collect payments with GoCardless


Create your free GoCardless account, access your user-friendly payments dashboard & connect your accounting software (if you use one).


Easily set up & schedule one-off or recurring payments via payment pages on your website checkout or secure payment links.


From now on you'll get paid on time, every time, as GoCardless automatically collects payment on the scheduled date. Simple.

Get started in minutesLearn more

How does SMS payment processing work?

There are several options when it comes to taking SMS mobile payment. Some involve redirection to a third-party website for payment processing, while others don’t require any input outside of the SMS text.

  1. Customers are directed to a separate website for payment processing. When the customer has provided payment details on the website, they’ll receive a unique code to send to the text number provided for confirmation.

  2. Customers receive a text asking for payment verification. They can enter their confirmation directly within the SMS message and the approval is sent to the mobile phone provider for payment processing. The charges are then simply added to the customer’s phone bill.

  3. The customer enters a mobile phone number on a payment processing website, with the SMS payment provider then texting back a code used to access their purchased content or service.

While SMS providers take care of the payment processing aspect, how does your business get paid? Customers pay a premium cost for this type of SMS, with the charges typically added to their mobile phone account or regular monthly bill. As bills are paid, the mobile operator sends the charge on to the SMS payment provider, who takes their cut and then sends the payment to your business. Customer details are fully encrypted throughout the process.

Another option is to bypass the separate SMS payment provider and submit your own in-text links to the customer. When the customer clicks on the link, they’re redirected to an online invoice processed by your usual payment gateway.

Benefits of payment by SMS

There’s a wide range of benefits for businesses and their customers – not least of which is convenience. For busy consumers, the ability to pay for services directly from their secure mobile phone helps them keep on top of invoices and bills. For businesses, here are some of the primary benefits of payment by SMS:

  • You can take payments from customers who may not have access to a bank account or credit card, opening new opportunities for global expansion.

  • You can send SMS marketing messages to boost customer loyalty and keep your brand fresh in the customer’s mind.

  • You don’t have to deal with verifying card details or other security issues that come with card processing. The mobile phone provider handles the finer details of SMS payment processing.

Are SMS payments right for you?

Yes, if you want to take advantage of the benefits mentioned above. An SMS payment system gives you a versatile way to keep in touch with your customer base. While it’s easy to forget about emailed invoices or requests for payment, an SMS is harder to lose track of. There are plentiful SMS payment providers to streamline the process on your behalf, including PayPal Mobile, Relay, and Pagato. These companies ensure that payment processing is PCI compliant and secure. Just be sure to compare fees and features carefully to find the best fit.

We can help

It's easy to send out payment requests via SMS or your preferred messaging app, using GoCardless. Simply sign up for free, enter the dashboard, and create a one-off payment. Enter the details and receive a payment link that you can message directly to your clients.

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.

Over 85,000 businesses use GoCardless to get paid on time. Learn more about how you can improve payment processing at your business today.

Sign upLearn More

Try a better way to collect payments, with GoCardless. It's free to get started.

Try a better way to collect payments

Learn moreSign up