FAQ: How Does Text to Pay Work?

It is estimated that in 2020, mobile retail e-commerce sales in the U.S. will be worth $339 billion. This has been fueled by a growing trend among millennial consumers, and others, to prefer a seamless shopping experience through their smartphones, leading to unprecedented growth in mobile e-commerce sales in recent years. As a result, businesses are prompted to focus on SMS marketing and text payments to connect better with their target audience. 

Yet, not everyone is convinced of the benefits of mobile payment technology and that is reflected in the low adoption rate of mobile payment apps by merchants and consumers. To a certain extent, this can be blamed on the lack of knowledge about how text to pay works, how easy it can be, and how much better it can be than other payment methods.    

How Text to Pay Works

So, how does text to pay work? In an SMS payment system, there are two key stakeholders between your business and the customer: a text messaging platform and a payment processing platform, such as Square or Clover. 

Through the text messaging or SMS delivery platform, a customer sends a text to the phone number used by your business, to initiate the purchase. For example, let’s say the customer texts “Pay $50” to your business number. If it is the first time, the user needs to register some basic payment information with the intermediary, including card number, expiration date, etc. Once the user completes the purchasing action, the business follows up by sending a receipt through the same text messaging platform. 

The easy and real-time payment via text to pay increases your brand’s engagement with customers by letting them make payments without leaving the text conversation. With the help of the right platform for SMS delivery and payment processing, you can take advantage of all of the benefits text to pay has to offer.

Advantages of Text to Pay

Interestingly, the way text to pay works benefits both businesses and customers alike, creating a win-win solution for both sides. Whether you are a big brand, small business, or even a non-profit organization asking for donations, text to pay works as an extension of your SMS marketing efforts by potentially converting a subscriber into a paying customer. Here are some of the advantages of text to pay for businesses:

• Security: For several small businesses facing issues such as fraudulent credit card payments or counterfeit cash, text to pay offers an extremely secure option to receive payments. For brick-and-mortar stores, SMS payments may let customers skip the long checkout queues.     

• Customer retention: Even after the purchase has been completed, text payments let you continue the conversation via your SMS delivery platform with your buyers, offering them further discounts and coupons, which helps to build customer loyalty. 

• Convenience: Text-to-pay payments can be received anywhere a text message can be received, which requires significantly less cellular reception than processing payments over a mobile POS system. 

For customers, the following are similar, clear benefits of text to pay over other traditional forms of online payment channels:

• Convenience: Payments through texts with a few taps are far more convenient than logging into portals such as PayPal every time.  

• Security: With all identifying information kept in a secure environment, critical details such as bank account number or credit card number need not be revealed for making payments through texts. 

• Accuracy: With SMS marketing messages offering discounts and coupon codes, it becomes easier to use those time-sensitive coupons and deals through text payments.   

As you can see, a number of benefits are shared between businesses and customers alike, making text to pay a very compelling payment method. However, a seamless and successful implementation lies in choosing the right SMS delivery platform to support secure and timely payments through text to pay.

Choosing the Right SMS Delivery Platform for Text to Pay

An SMS delivery platform acts as an intermediary between your subscribers and mobile networks and facilitates the exchange of texts to pay through an SMS application programming interface (API). So, while you choose the right payment methods for your business, it is equally important to select a platform that supports end-to-end text-based conversations between you and a paying customer. Following are some of the features you need to consider before committing to an SMS delivery platform for text to pay:

• Data Security: Data security is a major concern anywhere mobile payments are concerned. An SMS delivery platform addresses this issue by providing a secured interface for payments.

• Reliability: Customers prefer minimal clicks to complete purchase actions through text-to-pay options. A text messaging platform offers reliability in terms of ease of usage and speed while operating through different networks. 

• Flexibility: With an SMS delivery platform, you can customize your text messages and the kind of payment information you want to send to your customers such as one-time-pins (OTPs). 

While selecting the right SMS delivery platform to implement a text-to-pay option, you should consider the technical support that you need for the seamless integration of SMS APIs into your business system. A text messaging platform that walks you through the integration process while offering custom SMS APIs and SMS gateways can prove to be a gamechanger for your brand and your customers.

Jeff Winaker

Jeff Winaker is the CEO of NorthText. He’s passionate about helping clients reach their customers faster with SMS marketing. He resides in the Bay Area with his family.