How Do SMS Payments Work?

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 Accept SMS Payments

Accepting SMS payments can greatly enhance customer convenience and boost sales. As your SMS payments service provider, here’s how to effectively accept SMS payments in your business.

Step 1: Choose the Right SMS Payment Provider Selecting a reputable SMS payment provider is crucial if you want to accept SMS payments. Ensure they have reliable security for data protection, a user-friendly interface for simple transactions, and wide compatibility with payment methods like credit/debit cards and digital wallets. Effective customer support is also essential for troubleshooting any issues.

Step 2: Set Up Your SMS Payment Account Setting up your SMS payment account is straightforward. Start by signing up and completing the registration form for your business. Complete any necessary verification steps to confirm your identity, and then integrate the SMS payment system with your existing e-commerce or POS systems for seamless processing.

Step 3: Configure Payment Options Customising your payment options allows you to tailor your services for accepting SMS payments. Decide on payment types, such as one-time or recurring, and set appropriate transaction limits. Implement automated notifications to confirm transactions, enhancing communication with customers.

Step 4: Educate Your Customers To drive adoption, ensure customers understand the SMS payment process. Create promotional materials like flyers and social media posts explaining how to accept SMS payments. Use in-store signage to highlight these options and provide solid customer support for any inquiries.

Step 5: Launch Your SMS Payment System When ready, launch your SMS payment system. Begin with testing to ensure everything works correctly. Consider a soft launch with selected customers to gather feedback. Once you’ve resolved any issues, announce the SMS payment option to all customers.

Step 6: Monitor and Optimise After launching, regularly monitor your system’s performance. Track the transaction success rate and gather customer feedback for improvements. Use analytics from your provider to refine strategies and ensure you can efficiently continue to accept SMS payments.

By following these steps, you can effectively accept SMS payments and enhance customer satisfaction. As your SMS payments service provider, we’re here to assist you every step of the way. Feel free to reach out for support or inquiries about advanced features related to accepting SMS payments!

How can a customer pay by Text

Paying via text message provides a quick and convenient method for customers to complete transactions. Here’s a simplified overview.

Step 1: Receive Payment Instructions Customers start the payment process by receiving a text message from your business with payment instructions. This message could be sent after a purchase or as a reminder for an upcoming payment. Clear instructions in this SMS are vital to guide customers smoothly through the pay by text process.

Step 2: Initiate the Payment After receiving the payment instructions, customers can initiate the payment in two ways: by replying to the SMS with a keyword like "PAY" or by clicking a link that leads to a secure payment page. Providing both options enhances convenience for those who choose to pay by text.

Step 3: Enter Payment Information Next, customers provide their payment details. If redirected to a payment portal, they will fill out a form with card information. Customers who have pre-registered their details may only need to confirm their saved information, making paying by text more efficient.

Step 4: Confirm Payment Amount Once the payment information is entered, customers will review the payment amount displayed. This step is crucial to ensure accuracy and prevent errors during the pay by text experience.

Step 5: Authorise the Payment To finalise the transaction, customers must authorise the payment by entering their security details, such as a password or PIN. After this, they can click a "Submit" or "Pay Now" button to complete the process.

Step 6: Receive Confirmation After processing, customers receive a confirmation SMS that indicates whether the transaction was successful. This message includes essential receipt information, such as the transaction amount and reference number, providing reassurance for those paying by text.

Paying by text is designed to be fast and easy. A user-friendly and secure SMS payment process will enhance customer satisfaction.

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.