Remote and digital payments are a growing trend.
Text-to-pay, sometimes called an SMS payment link or remote payment, is rapidly gaining steam. Research indicates a growing majority of consumers, particularly younger buyers, are open to or even prefer the convenience of text-to-pay when available.”
With an average greater open rate compared to that of email, text-to-pay is a quick and easy way to charge customers, collect payments, and manage outstanding balances remotely.
In today’s digital culture, where websites and text messages can be accessed from nearly anywhere, accepting payments through text is a clear next step for your growing business.
So, what exactly is text-to-pay, and how can you leverage it for your business? Here is everything you need to know about text-to-pay payment processing.
What is text-to-pay?
Text-to-pay is the process of accepting payments through mobile text messages. As an innovative payment processing tool, SMS payments (short message service payments) improves efficiency, speed, and collection rates. This card-not-present (CNP) solution is a great fit for any industry or business that features recurring billing but can also be used for one-time payments to businesses with individual payment requests.
Offering text-to-pay as a payment option is effective for several business types, including salons, retail stores, restaurants, or any business that offers subscription-based products and services. This card-not-present (CNP) payment solution provides security for your customers while also eliminating paper waste and reducing late or missed payments.
How text-to-pay payments work
With the text-to-pay feature, you can send an invoice to your customer via SMS, making it extremely convenient to get paid. By sending a secure payment link via SMS, your customer is more likely to respond right away. If they store credit card information on their phone, they can easily pay you with just a few taps using their device’s stored payment methods (like Apple Pay or Google Pay) or securely stored card details via your payment processor’s PCI-compliant tokenization vault.
Offering electronic invoicing and text-to-pay can significantly increase customer lifetime value (CLV). Studies consistently show that providing flexible, convenient payment options drives higher purchase frequency and increased sales from existing customers. Offering multiple payment options to your customers has also proven to boost sales and increase revenue. It provides flexibility and convenience, putting more purchasing power in the customer’s hand.
Text-to-pay is primarily utilized for two main scenarios: 1) Ad-hoc or one-time payments for outstanding invoices or balances, and 2) recurring payments for managing subscriptions or stored card updates.
- First, your customer opts in to accept text messages from your business account.
- Your business can then send pay-by text prompts through text to the customer’s phone number. This includes notifications when payments are due.
- The customer clicks the secure link and is directed to a PCI-compliant payment page to enter their personal payment information, deciding whether or not they’d like to save the card info for future purchases.
Within seconds, the customer receives a reply text confirming receipt of payment.
How using text-to-pay payment processing can benefit your business
Implementing text-to-pay helps your business unlock a number of benefits, including:
Speeds up bill payments. When you consider that the global average open rate on a text is more than 90% and it takes the average person 90 seconds to respond to a text message, building a text database for your business makes sense. Doing so speeds up your collection process and can even provide an active customer database that your business can use to retarget customers for future promotions and sales opportunities.
Reduces manual work. Text-to-pay helps facilitate secure payments without all the admin and manual processes. You can automate bill notifications and reminders. And depending on your solution provider, you can even get real-time visibility into whether or not customers have opened your message or viewed the invoice.
Better communication. Depending on your provider, text-to-pay can also streamline customer communications. Stax, for example, gives you 2-way communication capabilities along with our text-to-pay offerings. You’ll be able to answer customer questions via text and make changes to their orders within the same payment interface, thus reducing back-and-forth.
Improves the customer experience. Text-to-pay lets customers settle their bills with just a few taps on their mobile phone. Plus, they can do it wherever they are, so there’s no need to be in the store or in front of the computer. This enables your customers to have a more convenient payment experience—in turn giving them more reasons to purchase from you.
Text-to-pay pricing
How much does it cost to implement text-to-pay? This depends on a number of factors, including the type of credit or debit card used as well as your payment processor.
As a card-not-present (CNP) transaction, text-to-pay is processed at a generally higher interchange rate than in-person, card-present transactions. This makes a cost-effective processor like Stax even more essential to minimize these expenses.
Your payment processor may also charge a markup per transaction, and some providers also bill you for every text message sent.
As such, be sure to carefully evaluate solution providers when you’re looking to implement text-to-pay. At Stax, we give you access to wholesale interchange rates without expensive markups. Instead of taking a percentage out of your sales, you simply pay a flat subscription fee and enjoy more cost-effective payment processing.
Final words
Text-to-pay transactions have become a very popular way for customers to submit payments. That’s why it’s important that you’re working with a payment processing company that offers secure, cost-saving, and hassle-free ways to accept those card-not-present payments without the inflated percentage-based markups often associated with CNP transactions.
With Stax, not only will your business have access to the wholesale card-not-present rates, you’ll also be able to schedule recurring payments, send text-to-pay requests, and monitor your invoices all within the dashboard.
Interested in streamlining your payments process and increasing flexibility in how you receive payments? Reach out to Stax for a consultation today.
FAQs about text-to-pay
Q: What is text-to-pay?
Text-to-pay is a card-not-present payment method that allows businesses to accept payments through mobile text messages. It is also referred to as Text2Pay or SMS payments.
Q: How does text-to-pay work?
The process starts with the customer opting in to accept text messages from your business. Your business can then send payment reminders via text, including notifications when payments are due. The customer enters their personal payment information and chooses whether or not to save the card info for future purchases. The customer then receives a reply text confirming receipt of payment.
Q: What kind of businesses can benefit from text-to-pay?
Text-to-pay is effective for several types of businesses, including salons, retail stores, restaurants, or any business that offers subscription-based products and services.
Q: How can text-to-pay improve efficiency in payments?
Text-to-pay can speed up bill payments, reduce manual work, enhance business and customer communication, and improve the customer experience by allowing them to settle their bills with just a few taps on their phones.
Q: Does offering text-to-pay as a payment option have an impact on sales?
Yes. Research has shown that customers who have a business relationship and are offered electronic invoicing and text-to-pay options tend to buy more frequently, which can potentially boost sales and increase revenue.
Q: What are the charges for implementing text-to-pay?
The cost of implementing text-to-pay varies, depending on several factors like the type of credit or debit card used and your payment processor. Merchants might have to incur payment processing expenses, and some providers charge for every text message sent.
Q: What do I need to consider when choosing a provider for text-to-pay?
When looking to implement text-to-pay, consider aspects like the type of credit or debit cards accepted by the provider, whether they offer wholesale interchange rates without expensive markups, their invoice tracking features, and the ability to schedule recurring payments, among others.
Q: Can text-to-pay facilitate better communication with customers?
Yes. Some text-to-pay providers give businesses 2-way communication capabilities, which means they can answer customer questions via text and make changes to orders within the same payments interface.
Q: Does text-to-pay allow for recurring payments?
Yes, text-to-pay is especially beneficial for businesses that offer subscription-based products and services since it facilitates recurring payments.
Q: Is text-to-pay a secure payment method?
Yes, text-to-pay is a secure method of payment that helps reduce paper waste and minimize late or missed payments.
