Accepting SMS payments helps small businesses get paid quickly, improving cash flow while increasing efficiency. Most of your customers likely have cell phones, making them good candidates for text-to-pay solutions. But what is the SMS payment method, and how does it work?
Getting paid by text is secure and straightforward. Many credit card processors support pay via SMS through pay links, which you can use with your internet-based phone system or text messaging service. Below we explain how to accept SMS payments and provide tips for implementing this mobile-friendly solution.
What are SMS payments?
SMS payments, called text to pay or text2pay, are contactless, mobile payment methods. SMS is the acronym for short message service, and it provides enough space for a payment link and a message from your company.
The text-to-pay process begins with the business texting the customer a payment link. Upon receipt, the client clicks on the link, which opens a web page (a secure payment gateway), where they complete the transaction. Less commonly, some text-to-pay systems allow customers to pay directly from the message.
After completing the payment process, the customer and business receive confirmation and receipt information. The funds are transferred based on your payment processing settlement timeline.
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Setting up business texting: Mobile SMS payment options
Almost anyone can request payment via text. Solopreneurs, side gig hustlers, and small businesses can do it professionally using payment processors, e-commerce platforms, and text marketing services.
Entrepreneurs who accept mobile or online payments through PayPal or other services may be able to access payment links. Look at your provider's knowledge base, or check your dashboard to see how to generate and send payment links through texts.
If you haven't added electronic payments to your toolkit yet but are researching credit card processing facts, the text-to-pay feature is a good point of comparison between providers. Consider finding reputable payment providers offering low-cost or free tools for SMS payments.
E-commerce platforms like Wix let you create pay links and paste them into text messages. It supports one-time payments or links for multiple contacts. If your brick-and-mortar shop or service business isn’t ready for a complete online system, a credit card processor like Helcim might be the answer. It supplies free hosted payment pages and pay links.
Another way to accept SMS payments is by using text message marketing tools. A service like Textedly offers text-to-pay and bulk marketing messaging solutions on a single platform. It manages the subscribe/opt-out process, provides customer portals, and completes transactions through a payment processor like Stripe.
In many cases, the SMS payment solution supplies a phone number for sending payment text messages. But not all companies allow two-way communication. Alternatively, paste the payment link into a standard text or email message. Review your business phone system options to ensure they support secure SMS texting.
On the administrative end, pay by text streamlines checkout, automates invoicing, and decreases manual work. You can get paid faster and spend less time on repetitive tasks.
What types of businesses use text to pay?
Mobile SMS payments fit many use cases, making them ideal for sellers of products and services. Consider the online therapist, coach, or tutor who book client appointments. They can send one-time or recurring mobile text links to ensure timely payments.
Spas and salons can improve client experiences by ditching the checkout line and sending an SMS payment link instead. Some salon software solutions offer payment links or integrate with text-to-pay processing options.
The artist selling on commission or a local marketplace reseller can request a deposit or full payment via text. Likewise, a small business offering local delivery services can quickly turn a cash-on-delivery payment into a mobile transaction by generating a payment link.
Brick-and-mortar businesses can add e-commerce functionality without building a new website or substantially increasing their monthly budget. Some vendors, including Clover and Helcim, provide online capabilities with merchant account services.
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Why do consumers pay with text?
Research shows that speed and convenience are among the top reasons why people prefer certain payment methods. Pay-by-text solutions can be fast and simple, especially for those who use their mobile phones for practically everything. According to a Textedly survey, "35% of small business consumers prefer to pay by text."
Indeed, a global consumer trends report found that 91% of consumers worldwide "have already signed up for an SMS program, or are interested in doing so." So, which of your customers are likely to pay by text?
Good candidates for text-to-pay solutions include the following:
- Those who already receive marketing or transactional messages.
- Clients who pay electronically through invoices or want to pay online.
- Consumers who prefer click to pay through Google Pay or Apple Pay.
- Customers who don’t open their email regularly.
- Late payers who miss email or phone call reminders.
How to accept SMS payments?
The SMS payment process is straightforward. However, it differs slightly depending on whether you use your payment processor, e-commerce platform, or text messaging service. You will generally request permission to text your customer and create payment links through an online dashboard.
Follow these steps to accept SMS payments:
- Get permission: The Telephone Consumer Protection Act requires businesses to get consent before sending payment texts. Consider tracking opt-ins and outs through an email marketing customer relationship management application to ensure compliance.
- Configure text to pay: Your vendor may let you create one or more payment landing pages or customer portals. During the setup process, you can establish rules for all SMS payments.
- Generate an SMS payment text: Go to your payment dashboard and create a one-time or recurring link. Depending on the vendor, this may involve entering invoice details and selecting a contact from your database.
- Send the mobile payment request: For the final step, you will either paste the pay link into your business texting platform or click to send directly from your dashboard.
[Read more: 5 Steps to Expand Beyond E-Commerce and Diversify Your Business]
How to find an SMS payment provider?
Find an SMS payment provider by looking at your current technology platforms to see if any offer payment links or text-to-pay solutions. If you don't accept credit cards at your business, consider adding this payment method and choosing a merchant account service with pay-by-text tools.
The following payment processors support in-person, online, and mobile SMS payments:
- Stax: High-volume sellers appreciate Stax's efficient text message payment service. It offers subscription-based processing plans with no markups on interchange rates.
- Clover: All Clover merchants can use the Online Payments link feature to direct retail or restaurant customers to a branded payments page to pay for goods or services.
- Payment Depot: You can accept credit cards, digital wallets, and automated clearing house payments. Payment Depot supports recurring billing, so clients don't need to reenter payment info.
- Helcim: All merchant accounts through Helcim include pay links. New customers submit card details, whereas repeat buyers can pay with one click.
Pros and cons of text message payment services
Accepting SMS payments is a win-win for many small businesses. It's customer-centric, allowing shoppers to buy items or services without having cash or a checking account. They can use their mobile device instead of a payment terminal or other face-to-face method.
On the administrative end, pay-by-text streamlines checkout, automates invoicing, and decreases manual work. You can get paid faster and spend less time on repetitive tasks.
The main challenge of SMS payments is compliance. You must have permission to text customers, allow them to opt out, and track unsubscribes. Some technology platforms automate or streamline this task.
Cost can also be a factor, as some vendors have hidden fees that increase the cost of text message payments. However, this shouldn't be an issue with reputable payment providers.
Lastly, a pay-by-text solution that doesn't integrate with your point-of-sale or accounting system can add to your workload. Look for options that automatically sync transactions or have a simple export process.
[Read more: Why Text Message Payments Might Be Good for Your Business]
Are SMS payments secure?
Trusted text-to-pay solutions meet Payment Card Industry standards. To ensure compliance on your end, it's vital to take steps to protect customer data. Credit card processors, e-commerce solutions, and text payment services guide businesses on how to reduce risk when completing transactions online.
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