SMS Payment Solutions | Pay by Text Solutions

2023 Guide to automating payment collection

Get in touch!

We'd love to hear about your payments via SMS needs are.


What are SMS Payments?

SMS payments, or Pay by Text payments,  are a means of paying for services or goods via a mobile phone text message. The customer typically receives a text prompting them to initiate payment via a website interface or additional text messaging.

Almost any business that takes payments for goods or services can realize operational costs savings and an uptick in collected revenues by choosing to accept payments by text message.

Businesses can initiate SMS payment texts in a batch mode via file upload or by using an SMS Virtual Terminal.


Contact us

We'll get in touch with you just as fast as we can!


What is an SMS Payment | Text to Pay Solution?

SMS stands for Short Messaging Service, and centers around cell phone texting. SMS Payment Solutions allow businesses to:

  • Text customers with payment reminders
  • Accept payment via the cell phone

Most people in the US and Canada have seen TV special or commercials asking for donations through text messages. A charitable organization like the Red Cross accepts donations via just text a message or number to make a $20 donation. Many charities have elected to accept payments by text message.

Businesses now realize paying by text offers benefits to both consumers and the business itself. With 98% open rates, 95% read rates it’s easy to see why SMS Payment Solutions are such an attractive customer billing option.SMS-payments

Using SMS, you are able to send a message of up to 160 characters to another mobile device.

Research conducted by showed that SMS accounts for a majority of financial transactions conducted worldwide, and mobile payments conducted through SMS are expected to experience a YOY growth rate of over 28% and total $385 Billion in revenues.

Over 80% of Americans use text messaging, making it the top activity performed on a smartphone. Despite its popularity, most billing organizations ignore texting as a paperless payment channel. Any business dealing with late payment collection should consider a pay via text message solution.

Insurance companies, utility, telecom, financial lenders, the rent-to-own industry, property management and more can all realize significant operational savings, as well as collections uptick by utilizing an SMS Payment Solution. Payment collection via text messaging is a great way to offer customers convenience as well reduce payment collection costs.


How do SMS Payments | Text Payment Solutions Work?

Text to Pay solutions allow your customers to opt-in to receive a text message containing information (e.g. current balance and due date). Customers opt-in to either receiving pay by text messages or solely bill payment/late payment text reminders.

  1. Customers opt in to receiving texts around their account
  2. When current charges come due, text messages are sent to all clients opting-in to the payment channel. The business would be able to customize rule sets and workflows. Eg “When bill is 2 days late initiate outbound text to pay campaign”
  3. Customers wanting to pay an invoice via text interact with their phone. In some cases, they could be directed to a secure payment page to enter relevant data [eg credit card or ACH]. In other cases, if they have a payment account associated with their text to pay account payment can be made using securely stored payment data
  4. Customers and businesses receive receipt notification. If using a management software reconciliation can be automated if your software has integrated the SMS payment solution (Text 2 Pay) into the platform

Your customers will appreciate the convenience of 10-second payments and your business will benefit from fewer delinquencies and shortened payment days outstanding.

While some businesses may prefer to automate the SMS process via a file upload or information push, others are better served by using an SMS Virtual Terminal or Pay by Text Virtual Terminal.

A customer service representive logs into a secure website.  The website offers a dashboard allowing for easy navigation. This become the control center for originating texts and 2-way communication. 

This secure website is the SMS Virtual Terminal. A business may have unlimited users. Admins can with limit permissions as well as view reporting based on an individual user.

An invoice text can be easily and quickly created, either by manually entering customer details or the customer base (or a subset) can be “loaded”.

The customer receives the text and can then interact with the cs rep by texting. The cs rep can take advantage of pre-made templates that address FAQ’s.

The customer clicks on a link to be taken to a secure page with the business's branding + contact information. Texts are delivered to the customer from a local number that when called redirects the customer to the business*.

*Note that this is not common in SMS Virtual Terminal Payment Solutions

Consider a medical practice using an SMS Virtual Terminal. The patient arrives and while still in their car can text the office notifying their arrival. A cs rep can engage the patient and address pre-office needs PLUS collect a co-pay. All with no face to face contact.

A very important part of collecting payments is reconciliation. If you were part of a multi-location medical group with centralized billing and collections the ability to recognize revenue to the appropriate location is very important. So much so that without a way to do this the convenience of the new SMS Virtual Terminal payment collection tool is mitigated by the extra accounting work.

Our Pay by Text Virtual Terminal offers the ability to establish hierarchies. Once the cs rep is in Virtual Terminal they can simply choose which location the payment should be recorded to.


What are the benefits of a pay by text solution?

For the customers
  • SMS Payments are quick and easy to use.

  • After the initial setup, there is no need to have a payment method on hand – it is already saved in our secure environment.

  • Text payment reminders are efficient and simply retrieved.

    • No longer have to keep track of invoices sent via snail mail.

  • It is secure, as no personal details or account details are released.

    • Similarly, Customers will no longer be divulging sensitive information over the phone.

    • The purchaser doesn’t have to enter their credit card or bank details, or even have a bank account.

  • Customers don’t need to remember any passwords or usernames like sites such as PayPal. Payments by text are very simple for customers.

For the Business
  • The merchant can accept payments from any of the billions of mobile phones capable of texting worldwide.

    • Easy to use

  • Improved customer satisfaction.

  • Instantly access a powerful payment tool with your customer’s cell phone number (information most likely on file).

  • Merchants can receive payments from customers without a bank account or credit card.

    • Customers that would have otherwise not been reached.

  • Can build upon customer loyalty through:

    • SMS marketing messages

    • Discounts

    • Coupons

  • Merchants no longer need to worry about:

    • Verifying customers’ identities

    • Chasing payments

    • Cards being denied

  • Reduce the number of late payments and collect receivables faster.

  • Remove human error from manual processing.

    • Avoid data input mistakes (e.g. card and checking account numbers)

  • Motivate more customers to go paperless.



For more information see our 2020 Guide to SMS Payment Solutions


SMS Payment | Payments by Text Case Study

An auto insurance company implemented an outbound SMS payment | Text payment collection program.

When the premium payment was  2 days day late a text was sent to the customer advising the payment was due as well as the importance of continued coverage.

A second outbound text to pay was sent when payment was a day late.

The insurance company simply securely uploaded a csv file from their billing system containing relevant policy and customer information. The text contained instructions on how to make payment.

If the customer had already opted into the text to pay solution they could simply use the securely stored payment method. If a new user they were walked through the payment set up.

As part of the SMS payment solution, a settlement file with relevant details is made available to the insurance company, allowing them to reconcile payments in an automated fashion.

Significant decrease in live collection calls were realized as well as a drop in policy cancellations.

Both of the above resulted in reduced labor costs as well as the costs involved in policy cancellations. All from an easy to implement Pay by Text solution.

The improvements in operational efficiency result in higher profit margins. Better collection rates improved cash flow.


What to Look For in an SMS Payment Provider | Text to Pay Provider

Every provider should offer data security and PCI compliant SMS payment solutions. Here are 7 more things  to look for from your SMS Payment Partner:

  1. No code, self-service: Set up your message content, reply logic, fail-over settings and gateway integration without the need for any code. This gives the business control over their flows, no need for any managed service charges or change fees.
  2. PCI Compliance: Payments by Text |SMS is not typically a PCI compliant route. Instead, send trackable links to custom microsites to securely collect credit card details via smartphone browsers delivering your customers a secure, rich, branded and PCI compliant experience. The SMS Payment Gateway should provide  acompliance pathway.
  3. Stored Payment Method: For recurring payments, the ability to offer stored credit card details provides a more seamless experience and makes the payment process more convenient for the end users.
  4. Fail-overs: Link in voice or email if SMS delivery fails or if payment fails. SMS is an extremely effective way to reach your customers and delivery rates are high, but SMS delivery is not something that can be guaranteed. Therefore the ability to switch to another channel such as voice or email is beneficial if an SMS fails because of carrier network issues/maintenance, unavailable handsets or bad numbers.
  5. 2-way SMS: Set up automated SMS replies based on chosen keywords, allowing customers to respond for more information or speak to an agent.
  6. Network quality: Chose an SMS partner with high quality carrier connections and who specializes in business critical communications, not marketing. It is also important to always have a dedicated number unique to your campaigns, stay away from any shared or random numbers. The telco carriers all have spam filtering and volume restrictions designed to protect their end users, and if you aren’t careful even legitimate business messaging can get caught by those filters. The right partner who truly understands this space can advise you on the correct numbers to use and assist you with any compliance questions you may have.
  7. Global Number Purchase: Purchase numbers in the regions where your customers are located, improving international deliverability and response rates. 
  8. Transaction Deposit and Funding Reconciliation. The ability to tie transactions to a lump sum deposit.
  • How do I know if we have cell numbers?
    If you have customer data stored in a CRM but aren't sure if they are cell numbers, they can be parsed by a third party service to know if they are mobile numbers.
  • What payment types can be used?
    Credit cards and eCheck (ACH) can be accepted.
  • Can the system store payment information?
    The system itself doesn't store payment data, but what it can do is make an API call to the gateway to retrieve payment data. For example, if Susie Jones calls in and enters he account number, the system can ask Susie if she would like to pay her balance using the card ending in 4567.

How to get started