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How to Accept Mobile Payments via SMS

Updated Feb 21, 2023

Table of Contents

Open row
  • SMS payments enable customers to make payments via text messages.
  • SMS payments can help businesses receive payment more quickly and reduce the chances that customers miss 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.

Picture this: One day, out of nowhere, you get a text saying you’re months behind on one of your monthly payments. This comes as a shock to you. Wouldn’t you have seen emails reminding you of upcoming payments? Well, that’s the thing – with most people’s email inboxes becoming increasingly cluttered, payment emails often go missed. Text-to-pay – or SMS payment – helps 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 payment via text message. It’s different from mobile credit card processing platforms – such as the one in our review of Square. Instead, you could think of it as more of a PayPal alternative

Many text-to-pay platforms stay solely in a customer’s text inbox. Others, though, direct the customer to a URL to facilitate payment. In either case, the 160-character cap on SMS messages keeps things short, which customers appreciate.

How do SMS payments work?

The SMS payment process starts with your business sending a text to customers who have opted in to text-to-pay. This text may contain the customer’s balance due, due date or overdue reminders, immediate payment options or some combination of all three. If the customer pays via text, both parties will receive proof of payment. Learn more about what’s expected in the near future of mobile payment arrangements with our reviews of the best credit card processors.

Editor’s note: Looking for the right credit card processor for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.

You can also integrate your SMS payment platform with your customer relationship management (CRM) software to automate it. This way, you can start to build custom workflows through the software. For example, “On the first day of the month, remind the subscriber to pay.” Alternatively, your customer service reps can generate invoices and text clients directly for real-time conversations and payments.

Pros and cons of SMS payment solutions

SMS payment solutions can benefit both your business and your clients.

SMS payment pros for businesses

Here are some benefits to your business for billing clients via text message.

Did You Know?Did you know

Text messages have a roughly 10% higher read rate than emails.

  • Rapid payment: Many SMS payment solutions facilitate payment with just one or two clicks or a short text response. This setup eliminates the customer hassle of navigating through confusing interfaces, making payment more likely.

  • Instant customer verification: Theoretically, any login into an account with a username or a password could be a hacker. It’s much less likely that a person opening a link from a text message is someone other than the person linked with the phone number. This structure means that you won’t have to verify customer information before payment.

  • Automated notification of upcoming or overdue payments: SMS payment solutions automate payment reminder notifications. Plus, since texts reach nearly all customers, you can be confident 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 discounts if customers opt in to SMS payments.

  • Paperless billing: Producing one sheet of nonrecycled paper yields 60 grams of carbon dioxide emissions. Running your billing process via text instead of paper eliminates this emissions burden and lowers your company’s carbon footprint.

  • Less human error: When you receive your customers’ payment information, in some cases you have to manually add it to your credit card processing system or other payment platform. Doing so can result in manual errors that delay the payment process. SMS payments get you customers’ payment information in formats easy to copy and paste, eliminating this error.

  • Customer satisfaction: Emails can get buried, and personal emails requesting payment can get annoying to customers. Text messages remove both these unpleasantries from your clients’ lives. Instead, your customers receive straightforward messages. 

SMS payment cons for businesses

Here are some downsides to your company for billing through text messages.

  • Costs: Like any small business technology, SMS payment platforms aren’t free. However, many experts find SMS payment platforms to have unduly high fees and, in some cases, pricing structures that lack transparency. You can counter this drawback by asking potential SMS payment vendors to provide all their pricing and fee terms in plain writing before you sign up. Learn what’s included in a credit card processing agreement.

  • Security: Some experts argue that SMS payments aren’t adequately secure, while others claim the opposite. In any case, the mere existence of these concerns can discourage customers from paying via SMS, and that does your business no favors. We’ll get into the SMS payment security debate later in this article.

  • Potential to annoy customers: For all the convenience and simplicity of SMS payments, most people can’t separate texts into work and personal inboxes as with email. SMS payment messages may feel intrusive to some customers. That’s exactly the wrong note to strike with your clients, though many experts say that patrons who react negatively to SMS payment messages are rare.

SMS payment pros for customers

These are some advantages to your clients for paying bills by text message.

  • User-friendly method: Perhaps a customer with overdue payments has fallen behind because they can’t figure out how to navigate your payment website. Maybe they have the will to pay, but not the know-how. SMS payments solve this problem. They facilitate customer payment in just a few clicks or even a short text response. 
  • One-time entry of payment information: With SMS payments, your customers won’t have to enter their credit card information every time they pay you. After their first SMS payment, their information will be automatically recorded for future use. No need to input or verify information – one click puts it all in the right boxes.
  • No usernames or passwords: SMS payments are possible without any logins at all, so they don’t add more chaos to your customers’ Rolodexes of account logins.
  • Less chance of missing it: Since people rarely miss texts, SMS payments are a great way for customers to ensure they don’t miss your invoices and wind up overdue.

SMS payment cons for customers

These are some potential drawbacks for clients paying via text message.

  • It may feel unusual. Chances are your customers are accustomed to receiving payment reminders by email or postal mail. SMS payments, a relatively new payment method, may feel unusual enough for customers to find them untrustworthy or illegitimate. 
  • It may feel intrusive. Since most people don’t have more than one text-enabled phone number, there’s no divide between business and personal texts. Consequently, SMS payment messages may feel intrusive when they appear on personal phones. The result can be that customers feel annoyed with your company rather than loyal.
  • It may not feel secure. Customers often access emails and websites through password-protected internet networks. The cellular networks through which SMS messages are sent lack this password protection. So some customers may find SMS payments lack the security features needed when paying businesses. However, many experts believe that SMS payments are indeed secure.

Are SMS payments secure?

Although much debate exists about SMS payments and whether they are secure, your customers can rest assured their text message payments are likely safe from would-be thieves. This is because of how SMS payments work.

Let’s say you’re directing people to a website for payment and request they enter their credit card details there without the need for a Wi-Fi connection. There’s a common notion that forgoing Wi-Fi for LTE data lowers cybersecurity barriers. However, 4G LTE networks encrypt all data, making them just as secure as Wi-Fi. This fact undercuts the misconception that SMS payments aren’t secure.

FYIDid you know

The notion that phone data networks are less secure than Wi-Fi is a myth, rendering this distinction irrelevant for SMS payment security concerns.

Additionally, if you already have a customer’s payment information on file and just need a short text from a customer to trigger payment, then SMS payment is extremely secure. You won’t be sharing the customer’s payment details or information about what they purchased. You’ll just ask for a one-word text, perhaps just “Yes” or “Confirm,” to automate payment using your stored information. This process keeps sensitive information entirely off SMS networks.

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 trustworthy SMS payment vendor will meet all 12 PCI DSS requirements. This way, any information that your customers send you to facilitate payment remains secure.

  • Storage of payment data: Most SMS payment vendors will store customers’ credit card information, so you don’t have to keep inputting the data in the system. However, not all platforms include this feature.

  • Channel surfing: Despite all the advantages of SMS payments, texts are never guaranteed to go through. That’s why a good SMS payment platform will let you shift to other channels if your texts fail. Look for platforms that you can switch to voice or email if needed.

  • Automated response: Your SMS payment platform should allow your customers to respond with certain short phrases to trigger actions on your end. For example, a text with “Representative” will automatically connect the patron with someone from your customer service team.

  • Special text-to-pay tools: A trustworthy SMS payment provider will operate with a robust carrier network, spam filters and volume caps. This way, your business messages are more likely to make it to your customers.

  • Dedicated numbers: A trustworthy SMS payment company will provide each of its clients with a texting phone number unique to them. Shared numbers are a red flag. You need to give your customer your undivided attention – if not, you might not get their attention the next time around.

Keep these factors in mind to choose the best SMS payment provider for both your business and your customers.

Max Freedman
Contributing Writer at
Max Freedman is a content writer who has written hundreds of articles about small business strategy and operations, with a focus on finance and HR topics. He's also published articles on payroll, small business funding, and content marketing. In addition to covering these business fundamentals, Max also writes about improving company culture, optimizing business social media pages, and choosing appropriate organizational structures for small businesses.
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