In the digital-first world, consumers prefer and expect convenient, tech-driven ways to communicate with and make payments to businesses. One of those methods is pay by text, which has continued to grow in popularity since the pandemic.
“Text is a modern communication method that a lot of folks out there just use,” said John Foreman, Chief Product Officer of Podium. “This is global now, and they expect to communicate with businesses this way. They're gravitating toward texting, and then payments are just a natural extension of that.”
A 2020 study found that 35% of customers are interested in paying a business via text message, yet just 4% of small businesses offered it as an option at the time. If you’re on the fence about adding text payments to your business’s point-of-sale options, here are a few key benefits and reasons to consider it.
[Read more: Choosing the Right Payment Methods to Accept at Your E-Commerce Business]
Benefits of offering pay-by-text options
1. It’s easy to reach multiple customers at once.
Texting allows for more asynchronous communication that businesses can streamline and automate, saving time.
“From an asynchronous versus synchronous perspective, it’s just really easy to talk to multiple people at the same time,” said Foreman. “A lot of folks just want to be able to talk to customers in ways they expect and give them the level of service they expect, which is a little bit harder via synchronous phone calls.”
2. It’s a simple way to improve accounts receivable collections.
Because most consumers already store payment information like credit and debit cards on their smartphones, paying and receiving payment via text message is a quick and easy method for both customers and businesses.
“Pay-by-text is one of those things you could add on to a collections process that's super handy,” said Foreman. “It's very easy for [customers] to pay immediately — unlike something like direct mail.”
Foreman shared an anecdote from a Podium customer, an appliance rental company, that uses text-to-pay as an extra way to try to collect past-due payments.
“They've got a 40% conversion rate on those texts, which has led them to collect almost an additional $1 million in past-due payments,” he said. “This is money that would've been hard to get.”
[Read more: Accounts Payable vs. Accounts Receivable: What's the Difference?]
A lot of folks just want to be able to talk to customers in ways they expect and give them the level of service they expect, which is a little bit harder via synchronous phone calls.
John Foreman, Chief Product Officer, Podium
3. It’s an excellent addition to your suite of payment methods.
Payment by text doesn’t replace the other ways your business might already accept customer payments; instead, it enhances your customers’ options so they can choose the method that’s most convenient for them.
“In my mind, this is a ‘no regret’ thing to try out because … you can still use all of the other ways of processing payments that you already do,” said Foreman.
Once you implement pay-by-text, it’s up to you when and how you use it. For instance, Foreman noted that some businesses use pay-by-text for the majority of their payments while others only use it for select cases like collections or deposits.
How to accept payments via text
Accepting payment by text for your business is a simple and quick process. According to Foreman, after setting up business texting, you’ll work with your payment processor to collect payments via SMS. This can be done in three ways:
- Text commands. These involve sending a text to customers with a trigger word (e.g., "PAY") that they can use as a response to make a payment.
- SMS invoices. This involves sending an invoice that outlines any due payment to a given customer with a link or other way to make a payment.
- Payment links. A payment link acts as a payment reminder for customers via text and allows them to visit a secure site to finalize the payment.
“[Text payment services] generate unique links,” said Foreman. “[They] take care of the whole checkout flow, just on the other side of that link. It's … simple [and] takes five minutes. It's really not a big deal to add it in.”
Accepting payment by text is a great way to meet customers where they are without inconveniencing yourself as a business owner. It’s a win-win method for both parties.
“Just try it out a few times, send out a couple of these links, see if people pay, see if you like it,” Foreman said. “Use it alongside what you're already doing. One of the things that we have learned is consumers really do have lots of different ways in which they pay. So we often encourage businesses to turn them all on.”
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