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Updated Mar 25, 2024

How to Accept Mobile Payments via SMS

Streamline your payment process and boost customer convenience with this digital payment method.

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Max Freedman, Business Operations Insider and Senior Analyst
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Editor Reviewed
This guide was reviewed by a Business News Daily editor to ensure it provides comprehensive and accurate information to aid your buying decision.

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Picture this: One day, out of nowhere, you get a text saying you’re months behind on one of your monthly payments. This news comes as a shock. Wouldn’t you have seen emails reminding you of upcoming payments? But with most people’s email inboxes becoming increasingly cluttered, payment emails often go unread. Text-to-pay — or SMS mobile payment — helps address this problem for consumers and can empower businesses to collect timely payments.

What is text-to-pay?

Text-to-pay is a mobile payment solution that helps businesses secure customer payments via text messages. It differs from mobile credit card processing, which processes payments on the spot using dedicated apps or mobile hardware. (See our review of Square to learn about a mobile credit card processing platform.)

Some text-to-pay messages deliver payment reminders, while others direct the customer to an online invoice or dedicated payment page. Some even allow one-word responses that trigger payment. No matter what, the 160-character cap of SMS messages keeps things short, which customers often appreciate.

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.

How do SMS payments work?

SMS payments work in several ways:

  • SMS payment providers. Businesses can work with a specialty SMS payment provider, credit card processor or text marketing service to facilitate text payments. These services may support several payment options, including a click-through link to a secure payment gateway or reply-to-pay functionality.
  • CRM software. Businesses can integrate their SMS payment platform into one of the best CRM software platforms to automate the process via custom workflows. For example, they can create a workflow that automatically sends customers text payment reminders on the first of the month.
  • Manual or automated text invoicing. Customer service reps can generate invoices and text clients directly for real-time conversations and payments. They can automate this process or do it manually.
Did You Know?Did you know
Some of the best text message marketing services can help you set up text-to-pay functionality via several methods. For example, read our Podium review to learn how this platform facilitates text payments.

How to accept SMS payments

The SMS payment-acceptance process is straightforward. Here’s how it works:

  1. The business sends a payment message. The business sends a text to customers who have opted in to text-to-pay. (Note that a text service will use a phone number different from the business’s number.) This message may include several payment prompts:
    • Payment reminders. These texts may contain the customer’s balance due, share a payment’s due date or present an overdue payment reminder. If the message is a simple payment reminder, the business assumes the customer will remit payment.
    • Payment link. If the message features a click-through link, the customer can immediately remit payment. After clicking this link, they’ll be taken to an online invoice or landing page where they provide their financial details and confirm the payment. The customer may receive a confirmation code. The business’s SMS payment provider or payment processor will process the payment as it would any online payment.
  2. Reply-to-pay. The SMS payment message may have reply-to-pay functionality. In this case, the customer pays by replying to the text. The business may already have the customer’s payment details on file. Or, their reply may automatically send the charge to their mobile provider to be placed on their bill. In this case, the SMS payment provider recoups the money from the customer’s phone provider and subtracts its share. The business receives the rest.
  3. Receipts are issued. If the customer pays via text, both parties will receive proof of payment.
Some of the best credit card processors can assist with SMS payments. For example, our Stax review explains this provider's text-to-pay option, which allows businesses to text customers a mobile-friendly payment link.

Pros and cons of SMS payment solutions

SMS payment solutions have various upsides and disadvantages for customers and businesses.

SMS payment pros for businesses

SMS payments bring the following benefits to businesses:

  • Customers will likely see and open the SMS payment message. The read rate for texts is significantly higher than that of emails. Investing in an SMS payment solution might lead to a higher open rate and more on-time payments.
  • Facilitate fast payments. Many SMS payment solutions facilitate payment with just one or two clicks or a short text response. Customers don’t have to navigate through confusing interfaces, making payment likelier.
  • Instantly verify customers. Sending a payment link directly to a customer means you won’t have to verify customer information before payment.
  • Issue reminders. Automated payment reminders can help customers pay on time or quickly remedy overdue payments.
  • Integrate with your loyalty program. You can use the same opt-in texting channels and functionality to send marketing messages and customer loyalty program rewards and initiatives.
  • SMS payment messages are paperless. Your text-based invoices and reminders can lower your company’s carbon footprint.
  • Reduce billing errors. SMS payments minimize the need for manual payment information entry, reducing errors. Plus, automating text invoices means you’re less likely to forget to bill a customer.
  • Boost customer satisfaction. As with opt-in email marketing, when customers agree to receive SMS payment messages, they’ll receive clear, straightforward messages that help them stay on top of their payment obligations.
Did You Know?Did you know
According to 2024 data from EZTexting, 53 percent of customers prefer to receive payment reminders via text. In contrast, 34 percent prefer email and only 7 percent prefer phone reminders.

SMS payment cons for businesses

Businesses may experience the following downsides of SMS payments:

  • SMS payment messages may incur costs. If you opt for an SMS payment provider, you’ll likely incur costs. For example, text service Podium charges 2.7 percent + $0.30 per transaction. Another service, Paysley, charges monthly fees of up to $99 and transaction fees. Complicating things, some providers, such as Payment Savvy, don’t transparently list prices online. Work with any potential provider to ensure you understand all costs and fees.
  • Customers may be annoyed by SMS messages. Even though customers must opt in to receive your texts, they may eventually find them intrusive.

SMS payment pros for customers

Your customers will enjoy the following upsides of SMS payments:

  • SMS payments are user-friendly. Navigating a business’s payment website can be challenging. In contrast, SMS payments can help customers complete their financial obligations in just a few clicks or by a short response.
  • No payment details required. With SMS payments, your customers won’t have to enter their credit card information every time they pay. After their first SMS payment, their information will be automatically recorded for future use.
  • No usernames or passwords. SMS payments don’t require logins or add more chaos to your customers’ Rolodexes of account logins.
  • Customers won’t miss SMS payment texts. 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

Customers may experience the following drawbacks when paying via text message:

  • SMS payments may feel uncomfortable. Chances are your customers are accustomed to receiving payment reminders by email or postal mail. SMS payments, a relatively new payment method, may feel too unusual for customers to find them trustworthy or legitimate.
  • They 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.
  • Customers may not feel secure. While SMS payments are widely considered secure, customers may have qualms about not using passwords or seeing typical security features.

Are SMS payments secure?

As touched on above, there’s some debate about the security of SMS payments. However, SMS payments are considered very secure due to how they work.

For example, say you direct customers to a website for payment and request that they enter their credit card details without needing 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.

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

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

What to look for in an SMS payment provider

When choosing an SMS payment provider for your business, look for these features:

  • PCI compliance. A trustworthy SMS payment vendor will meet all PCI compliance requirements. Any information your customers send to facilitate payment will be secure.
  • Payment data storage. Most SMS payment vendors will store customers’ credit card information, so you don’t have to keep entering the data into 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 allow you to switch to voice or email if needed.
  • Automated responses. Your SMS payment platform should allow your customers to respond with specific 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. Your SMS payment platform should support click-to-pay links and payment via one-word responses.
  • Robust infrastructure. A trustworthy SMS payment provider will operate with a solid carrier network, spam filters and volume caps. This way, your business messages are more likely to reach your customers.
  • Dedicated numbers. A trustworthy SMS payment company will provide each client with a unique texting phone number. Shared numbers are a red flag. You must give your customer your undivided attention — if not, you might not get their attention the next time.

Making the most of SMS payments

While SMS payments might be unfamiliar, they go a long way toward streamlining and simplifying your payment processes. Your customers will likely appreciate the convenience of receiving a payment notification via their texting app, and your team will benefit from on-time payments. It’s a win-win. With the proper research and strategy, it can be a game-changer for your organization.

Jane Godiner contributed to this article.

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Max Freedman, Business Operations Insider and Senior Analyst
Max Freedman has spent nearly a decade providing entrepreneurs and business operators with actionable advice they can use to launch and grow their businesses. Max has direct experience helping run a small business, performs hands-on reviews and has real-world experience with the categories he covers, such as accounting software and digital payroll solutions, as well as leading small business lenders and employee retirement providers. Max has written hundreds of articles for Business News Daily on a range of valuable topics, including small business funding, time and attendance, marketing and human resources.
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