Payment by Text: 5 Vital Considerations for Businesses

In this blog, we’ll look at several aspects of payment by text technology and discuss a few areas where companies might want to focus. The information here is intended to help your company understand important considerations and how to optimize the pay by text capability.

1. The Stats: Mobile Phone Usage and Pay by Text Options

As we all know, cell phone usage is, without a doubt, the norm these days. As a matter of fact, according to Pew Research, 96% of all Americans have a cell phone of some kind—292 million people in North America use text messaging. And, it’s reported that roughly 66% of consumers confirm they would pay more for a good or service if a mobile messaging channel supported it.

Based on the data associated with cell phone usage, it’s understandable why more businesses are considering payment by text solutions—a solution often viewed as more convenient for both companies and consumers.

And recently, because of COVID-19, some companies are looking to make cashless payments an option for customers out of safety concerns. This seems to fit the wants of consumers anyway when looking at the numbers. According to the Motley Fool, 69% of cell phone users find contactless payments more convenient than transactions involving paper money.

pay by text options

Here are a few other statistics that are impressive regarding cell phone usage:

  • Smartphone users in the United States send and receive roughly five times more texts than they make and receive phone calls
  • On average, people in the United States spend approximately 26 minutes per day texting versus 21 minutes per day making phone calls
  • 82% of all text messages are read by recipients roughly five minutes after being received
  • 77% of consumers who are age 18 to 34 and text are more likely to view companies that offer texting capabilities positively

2. Payment by Text and Security

It goes without saying that using any payment by text system should integrate the proper security protocols necessary to ensure that consumer data—financial, personal, etc. is protected and remains secure.

PaymentVision’s Pay by Text is a secure SMS payment gateway and uses PCI and regulatory compliant technology.

Payments made via Pay by Text also use hosted tokenization. This is a technology that was created and patented by PaymentVision. Hosted tokenization technology protects the data as the payment is processed directly through PaymentVision’s PCI level one certified gateway and immediately tokenized, eliminating the risk of the exposure of financial data.

3. Consumer Perception

Even when a payment by text system is secure and follows all necessary protocols to avoid and protect against malicious attacks, this doesn’t mean that a company still won’t suffer from past data breaches, scams, and phishing attacks.

How? Well, in short, because of consumer perception.

A study conducted by Pew Trusts found that 38% of consumers who decided against using mobile payment options for their transactions perceived mobile payments to be less secure than that of a credit or debit card. Even though mobile transactions that use credit and debit cards have the same protections as transactions that use only credit and debit cards.

But after countless cell phone owners have been exposed to pay by text phishing scams from those posing as the IRS, received texts requesting sensitive banking data, and other scams, it’s understandable how committing to engage in transactions on a cell phone could cause consumers to be apprehensive.

With this information in mind, it’s important that businesses take the lead on demonstrating to consumers how and why pay by text options can be beneficial for all parties involved and how they can be more safe and secure. Companies should continue to move forward building trust with consumers and potential customers.

4. Building Trust with Consumers

payment text customers

Building trust with customers that you communicate with via text message will begin with compliance, which we’ll look at later in this article. However, the use of short code text messages versus toll-free (TF) text messages could be one of the things that help your company gain more trust with your customers.

Experts suggest that the five-digit short code text messages may be viewed as impersonal. Additionally, the message recipient can’t place a call back to the five-digit short code number. However, with text messages that show as coming from a toll-free number, customers have the option to call back.

Though, the issue with toll-free texts is that cell phone carriers can sometimes filter 800 numbers out. Also, TFs texts take longer to send, whereas SMS text messages are faster.

More recently, the use of 10-digit long code or 10DLC is improving user experience. Aside from being a technology that will facilitate A2P and high-volume messaging, 10DLC also provides a more personal experience.

With 10DLC, text messages can be sent using a local ten-digit number. 10DLC will also allow two-way communication between businesses and consumers. Sooner or later, the use of 10DLC technology could contribute significantly to consumer trust in the payment by text world.

In terms of building trust, it’s important to point out that PaymentVision’s Payweb uses device authentication or multi-factor authentication to verify that a cell phone number is legitimately connected to the authorized user. And the process for doing this is simple.

First, a user must login to the Payweb system and enter their cell phone number. After the user enters their cell phone number, Payweb will then send a code to their mobile phone. The user then uses this code to verify ownership of the mobile number.

5. Compliance

As many in the business-to-consumer texting industry know, compliance is critical when communicating via text. Companies are required to abide by the guidelines outlined by the Telephone Consumer Protection Act (TCPA) or else pay fines—$500 per violation on up to $1,500 per “willful” violation.

Companies must always obtain consent before communicating with an individual by text. Consent can be done over the phone with an audio recording. Also, when a consumer gives a company their telephone number, this is considered implied consent. Note, the TCPA makes it clear that a company may not request consent to send texts via sending a text message. That would be a violation.

Consumers should also be given clear instructions on how to opt-out of a text or pay-by-text program. Some examples of this are the common “Reply STOP to Opt-Out” messages used by many companies.

It’s worth mentioning that opt-out rates that hit 4% can lead to carriers blocking text messages altogether. To avoid this, again, make sure you’ve obtained consent, be strategic and targeted with messaging – make sure texts being sent to consumers will resonate. In short, don’t spam, it’s not email, and if you don’t abuse it, text messaging can be incredibly powerful.

Just this year, we’ve seen the Buffalo Bills having to pay $3 million for TCPA violations. So always be mindful of compliance when it comes to texting consumers.

Payment by Text: A Recap

Today’s statistics show that consumers and businesses are moving towards the use of more mobile technology. Whether out of convenience or because of safety (COVID-19), many experts believe that more companies will adopt pay-by-text technology.

Security can be a concern for some, which is understandable. Building trust with consumers could be the needed approach to mitigate a lack of confidence from some consumers who perceive that any form of mobile payment is riskier than using a credit or debit card.

As companies move forward and implement payment by text solutions, it’s essential to stay informed on any changes to the Telephone Consumer Protection Act (TCPA). Their guidelines dictate policy, to include consent capture, regarding communicating with consumers via text.

Request your demo of PaymentVision’s Pay-by-Text. A payment by text solution that uses patented hosted tokenization.